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2016 (7) TMI 273 - BOMBAY HIGH COURT

2016 (7) TMI 273 - BOMBAY HIGH COURT - [2016] 387 ITR 561 - Reopening of assessment - non grant of opportunity to the assessee to meet the case against him - Held 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 reasses .....

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see 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. - 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 o .....

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essment 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 the disallowance of interest thereon of ₹ 16,684 ? (2) Whether the Tribunal erred in law in holding that the amendment to Sections 147 to 153 of the Act, made with effect from 1st April, 1989 were appl .....

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appeared to have taken a bogus hawala loan of ₹ 1,45,000/- from one M/s. Nuwan Investment and Trading Co. Pvt. Ltd. (Nuwan) whereby the assessee introduced his unaccounted funds in the form of bogus loan from Nuwan. A notice under Section 148 came to be issued but only in July 1993. The assessee sought reasons and also queried with the AO whether permission of superior authorities have been taken prior to issuance of notice. The AO contended that notice was issued within time as per amende .....

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ded against the assessee. Being aggrieved, the assessee approached the Tribunal which confirmed the order of the AO upholding the addition by partly allowing the credit of amount of ₹ 1,650/- as TDS. This is how the assessee is now before us in appeal. 4. Mr.Tralshawalla, learned counsel appearing on behalf of the assessee in support of the appeal contended that amended provisions of the Act could not have been applied in the facts and circumstances of the case and that the notice under Se .....

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ssessment 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 assesse .....

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had shifted its office and the assessee was unable to locate the party. He therefore submitted that in the facts of the case there was no occasion for the Assessing Officer and CIT(A) to uphold addition of ₹ 1,45,000/-. Mr. Tralshawalla then submitted that even otherwise and even assuming that the assessee was required to obtain a confirmation letter which he had failed to do, no proper opportunity was given to the assessee at the time of reassessment inasmuch as the AO had admittedly acte .....

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February, 1996 (Exhibit-G) pointed out that the amount of ₹ 1,45,000/- cannot be added under Section 68 of the Act on the basis of third party confession without allowing the assessee to meet the revenue's case including by cross examining such deponent. He requested the Assistant Commissioner of Income Tax (ACIT) to provide copies of the statements recorded by the revenue as also disclose material, if any, that the revenue wished to rely upon before making any addition and further to .....

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tion letter had been obtained from Nuwan and nor any other verifiable evidence in respect of loan transaction had been filed. This Mr.Tralshawalla submitted is a fundamental flaw inasmuch as it amounts to denial of opportunity of meeting the revenue's case and therefore 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 g .....

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ic 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 and Anr. 264 ITR 254 (Gauhati); Dep .....

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t the time of admission the Revenue had waived service. After this matter came to be admitted, on several occasions counsel on behalf of respondent had appeared and had undertaken to file Vakalatnama interalia on 24th July, 2008, 4th August 2008, 28th August 2008 and even thereafter on 29th September 2008. No appearance has been filed till date. Even after the matter first appeared for final disposal on 10th August 2015 although Mr.Suresh Kumar, learned Advocate for the revenue had appeared and .....

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la had pressed into service inter alia the decision of the Calcutta High Court in Mather and Platt (India) Ltd. (supra) and submitted that merely because a person is not found at an address after several years it cannot be held that he is nonexistent and that the assessee had discharged his primary onus by identifying the source of the amount paid. The Court observed that once the primary onus is discharged, the onus shifted to the revenue to verify genuineness of the transaction. In the present .....

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en 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. identi .....

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not probed further by the revenue. 14. The Delhi High Court in Ashwani Gupta (supra)held that once there is a violation of the principles of natural justice inasmuch as when its seized material was not provided to an assessee nor was he permitted to cross examine a person on whose statement the Assessing Officer relied, it would amount to deficiency, amounting to a denial of opportunity and therefore violation of principles of natural justice. In that case CIT (A) had deleted addition made by th .....

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Industries (supra) the Supreme Court found that the Adjudicating Authority had not granted an opportunity to the assessee to cross examine the witnesses and the tribunal merely observed that the cross examination of the dealers in that case, could not have brought out any material which would not otherwise be in possession of the appellant-assessee. The Supreme Court set aside the impugned order and observed that it was not for the Adjudicating Authority to presuppose as to what could be the su .....

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t, the revenue was not justified in making addition at the time of reassessment without having first given the assessee an opportunity to cross examine the deponent on the statements relied upon by the ACIT. Quite apart from denial of an opportunity of cross examination, the revenue did not even provide the material on the basis of which the department sought to conclude that the loan was a bogus transaction. 17. In our view in the light of the fact that the monies were advanced apparently by th .....

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