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Shri Sachinkumar Surya Versus ITO 18 (3) (2) , Mumbai

2017 (9) TMI 802 - ITAT MUMBAI

Reopening of assessment - addition invoking sec 69B - not allowing Assessee to cross-examine witnesses - Held that:- Denial of such opportunity goes to the root of the matter and strike at the very foundation of the assessment order. Not providing such opportunity amounted to violation of principle of natural justice, a serious flaw which makes the order nullity. We do not find any merit for the addition made by AO without allowing assessee an opportunity to cross examine the person on whose sta .....

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nds have been taken by the assessee:- 1. Under the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the AO's action of reopening the assessment U/s 147 without appreciating the facts and records available with AO as also without appreciating the fact that AO had acted on borrowed satisfaction as against his own assessment for making the satisfaction. 2. Under the facts and circumstances of the case and in'law the Id. CIT(A) has erred in confirming the .....

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wing proper documents for verification in its entirety to rebut the allegation made by the AO and therefore addition confirmed without allowing proper opportunity being bad in law the order should be struck down. 5. Under the facts and circumstances of the case and in law the Id. The order passed by the AO and confirmed by the Id. CIT(A) being in violation of natural justice the order should be annulled. 3. Rival contentions have been heard and record perused. Facts in brief are that the assesse .....

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i.e. 1503-A and 1504-A in the building known as Richmond' at Hiranandani Gardens, Powai, Mumbai. The agreement value of each flat is ₹ 62,42,500/-. The information received from the investigation wing is that the assessee has made cash payment of ₹ 40 lakhs, i.e. ₹ 20 lakhs each for both the flats. 4. During the course of assessment proceedings, the AO has supplied the reasons recorded for reopening, copy of the information received from the wing and a copy of the relevant .....

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ation. 5. Without affording cross examination AO made addition on the basis of statement of Director of Hiranandani Group u/s.69B being unexplained investment and added the same in assessee s income. 6. By the impugned order CIT(A) confirmed the reopening and also addition of ₹ 40 lakhs made u/s.69B. 7. Against the above order of CIT(A) assessee is in further appeal before me. It was argued by learned AR that reopening cannot be made merely on the basis of suspicion. He submitted that reop .....

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d that no addition was warranted. 9. On the other hand, it was contended by learned DR that there was definite information with the department and also statement of builder to the effect that assessee has paid on-money, therefore, AO has sufficient reason to believe that income has escaped assessment, the reopening was well justified. On merit of the addition he relied on the order of the AO and CIT(A) contended that in case of acquisition of house property, payment of on-money is a normal pract .....

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ase of assessee was reopened by issue of notice u/s.148. AO has recorded reasons for reopening and also supplied the same to the assessee. I had carefully gone through the reasons so recorded and found that AO has sufficient reason to believe that income has escaped assessment, accordingly reopening was justified. With regard to the merit of the addition, I found that on the basis of statement of Niranjan Hiranandani addition was made by the AO. I found that assessee vide letter dated 09/03/2015 .....

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rically declined cross examination of the person giving the statement on the basis of which addition was made. However, the cross examination was also not allowed by the CIT(A). As per my considered view denial of such opportunity goes to the root of the matter and strike at the very foundation of the assessment order. Not providing such opportunity amounted to violation of principle of natural justice, a serious flaw which makes the order nullity. Under these facts and circumstances, the judici .....

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at there were no sales / purchases but the transactions were only accommodation bills not involving any transactions. The Tribunal has recorded a finding of fact that the assessee had disputed the correctness of the above statement and admittedly the assessee was not given any opportunity to cross examine the concerned Director of M/s. Thakkar Agro Industrial Chem Supplies P. Ltd. who had made the above statement. The appellate authority had sought remand report at that stage the genuineness of .....

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authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which made impugned order nullity as it amounted to violation of principles of natural justice. The precise observation of the Hon ble Supreme Court was as under:- Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuc .....

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