TMI Blog2016 (7) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal on this very issue. - Decided in favour of assessee Relied on Delhi High Court ruling in the case of CIT v. Ashwani Gupta 2010 (2) TMI 42 (Del) wherein it was held that When seized material was not provided to an assessee nor was he permitted to cross examine a person on whose statement AO relied, it would amount to deficiency, amounting to a denial of opportunity and therefore violation of principles of natural justice. - Income Tax Appeal No. 58 of 2001 - - - Dated:- 30-6-2016 - M. S. Sanklecha And A. K. Menon , JJ. For the appellant : Mr. Deepak Tralshawalla For the respondent : None JUDGMENT ( Per A. K. Menon, J. ) 1. This appeal under Section 260A of the Income Tax Act, 1961 (the 'Act') challenges the order dated 29th September, 2000 passed by the Income Tax Appellate Tribunal (the 'Tribunal'). The appeal (relates to the Assessment Year 1983-84). 2. The appeal was admitted on the following questions of law : (1) Whether the Tribunal erred in law and fact in not deleting the addition made by the Respondent to the Appellant's income of the above loan of ₹ 1,45,000/- taken by the Appellant from Nuwan and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation, if one considers the fact that the amended provision could not have been invoked in the facts and circumstances of the present case. He, therefore, submitted that the order of the Tribunal and of the authorities below were not justified and urged us to answer the question in relation to validity of reassessment in favour of the assessee. 5. According to Mr.Tralshawalla, the Assessing Officer erred when he observed that since the amount has been credited in the books of account, the onus of proving genuineness of the transaction lies squarely on the assessee and that even during reassessment proceedings, the assessee had not filed a Confirmatory letter from Nuwan or any other justifiable evidence. Even the CIT (A) had failed to find substance in plea of assessee that it was not for the assessee to provide further evidence, although the loan was advanced and repaid vide account payee cheques. The learned counsel submitted that once prima facie bonafides of the loan transaction were established as aforesaid, it was for the revenue to establish that it was not bonafide. 6. As regards the revenue's (AO's) contention that the assessee has failed to obtain c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore in breach of rules of natural justice. When we queried Mr.Tralshawalla if this was one of the grounds before the CIT (A), Mr.Tralshawalla was quick to point out that in the grounds of appeal dated 18th March, 1996 Exhibit-I ground no.(2) clearly set out that the assessee was not given opportunity of cross examining the parties. These statements were relied upon by the revenue and the reassessment was made in violation of the principles of natural justice and were accordingly liable to be set aside. Despite this the assessee had also written on 6th January, 1997 to the CIT (A) urging very same grounds. However, the order of the CIT (A) ignores this objection. He, therefore, submitted that on the grounds of denial basic rules of natural justice, this appeal may be allowed and questions answered in favour of the assessee. 9. In support of his contention Mr. Tralshawalla relied upon the following decisions : Mather and Platt (India) Ltd. Commissioner of Income Tax 168 ITR 493 (Cal); S. Hastimal vs. Commissioner of Income Tax 49 ITR 273 (MAD); Additional Commissioner of Income Tax vs. Bahri Brothers (P) Ltd. 154 ITR 244 (PAT); Nemi Chand Kothari vs. Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Bahri Brothers (P) Ltd. (supra) the Division Bench of Patna High Court observed that where the assessee upon whom the initial burden lies, produces bank certificate to establish that the transaction was carried out through account payee cheques thus disclosing the identity of the creditors as also the source of income, the burden shifts on to the department and the department cannot add the cash credits to his income from undisclosed source. 12. The Hon'ble Supreme Court in Nemi Chand Kothari (supra) observed that in order to establish the receipt of a cash credit, the assessee must satisfy three conditions i.e. identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. In the instant case by virtue of the fact that the transaction was completed by cheque payments, the appellant has contended that it had satisfied all the three tests. 13. In Kishanchand Chellaram (supra) wherein the Supreme Court observed that the revenue authorities had not recorded the statement of the Manager of the bank and it was difficult to appreciate as to why it was not done and why the matter was not probed further by the revenue. 14. The Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the monies were advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the revenue should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal on this very issue. 18. Once we take this view it is not necessary to consider the second question as to whether or not the Tribunal had erred in law in holding that the amendment to Section 147(3) with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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