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TMI Blog2018 (11) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act after issue of notice under section 153A is bad in law and invalid. It be held that the reassessment proceedings got abated on issue of notice under section 153A(i) of the Act. It further be held that the Hon'ble CIT(A) erred in concluding that issue of notice u/s 153A(i) for the year under consideration is void-ab-initio. The assessment framed by the AO and that confirmed by the Hon'ble CIT(A) u/s 143(3) r.w.s. 147 be set aside. Just and proper relief be granted to the appellant in this respect. 2. On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be held that resorting to the provisions of sec. 148 /147 by the AO for reopening the assessment is improper, without satisfying the conditions for resuming the jurisdiction in terms of provisions of sec.147. It be held that assessment framed without granting an opportunity to raise objections on the reopening of assessment proceedings is contrary to the provisions of law. The assessment framed by the AO and that confirmed by the Hon'ble CIT(A) u/s. 143(3) r.w.s. 147 on this score be set aside. Just and proper relief be granted to the appellant in this respect. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained, it be held the said amount deserves to be allowed to be claimed as cost of acquisition of the said investment. Just and proper relief be granted to the appellant in this respect. 9. The appellant be granted consequential relief if any as deemed to be fit. 4. The learned Authorized Representative for the assessee pointed out that preliminary issue is raised vide grounds of appeal No.1 to 3. First, we will address the preliminary issue raised in the present appeal, which affects the jurisdiction of completion of assessment in the case under section 143(3) r.w.s. 147 of the Act. 5. Briefly, in the facts of the case, the assessee had furnished the original return of income on 07.02.2008 disclosing income of Rs. 44,96,415/-. The assessment was completed under section 143(3) of the Act after making addition of Rs. 1,75,000/- on account of low household withdrawals. Search and seizure operations under section 132 of the Act were conducted in the case of Agarwal group on 17.12.2013. The assessee was also covered as part of the said group under section 132 of the Act. Another concern at Bhosari i.e. M/s. Camron Infrastructure India Ltd. (hereinafter referred to as 'CIIL') was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to the extent of his share i.e. Rs. 7,50,000/- had escaped assessment within meaning of section 147 of the Act on account of failure on the part of assessee to fully and truly disclose all the facts. 6. Another search and survey action was carried out in the case of Shri Pravin Kumar Jain and his group on 01.10.2013 and it was noted that he was providing accommodation entries of various nature like bogus unsecured loans, bogus share applications and bogus sales, books of account of different share companies were also under his control and further pen drive was also found during the course of search. Statements of various persons were recorded and the contents are referred in the assessment order and the list of companies controlled by Shri Pravin Kumar Jain whose books of account were found were also impounded. The list of said concerns are placed at pages 15 and 16 and part of page 17 of assessment order. The Assessing Officer further noted that the name of assessee was appearing in the list of beneficiaries and the assessee had also taken accommodation entries from the entities operated and controlled by Shri Pravin Kumar Jain. The list of aforesaid entries on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee requested for supply of copy of reasons recorded which were given by the Assessing Officer on 25.04.2014. Thereafter, the assessee sought inspection of file and also to supply the statement given by Shri Pravin Kumar Jain. The Assessing Officer on 15.09.2014 informed the assessee that copies of statements recorded during the course of search and copies of seized material had already been supplied to him by DDIT(Inv) and also informed that his request to supply copy of letter forwarded to DDIT(Inv), dated 20.03.2014 could not be acceded to as it was internal document of the Department. The Assessing Officer forwarded the gist of findings of said letter to the assessee. The CIT(A) notes that thereafter the assessee did not file any objections against reasons recorded by the Assessing Officer and participated in re-assessment proceedings. Vide para 3.1.1 at page 8 of appellate order, the CIT(A) noted that in between the Assessing Officer issued notice for the year under consideration under section 153A of the Act on 12.05.2014. The assessee had raised the issue vide ground of appeal No.1 before the CIT(A) that after the issuance of notice under section 153A of the Act, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue of illegal notice issued under section 153A of the Act. Vide para 3.1.5, the CIT(A) acknowledges that the Assessing Officer had given full opportunity by supplying reasons recorded as well as gist of information in his possession running into six pages, against which the assessee did not raise any objection and now at this juncture, the assessee has raised the issue of non-providing of relevant material and hence, the assessment being contrary to the provisions of law. The Assessing Officer in this regard also submitted remand report, wherein he clarified that the Assessing Officer had supplied copy of reasons to assessee on 25.04.2014. On 15.09.2014, queries raised by assessee were clarified by the Assessing Officer and other details which were required by assessee were also furnished. In the said letter, the Assessing Officer clearly stated that if the assessee had any objection against initiation of proceedings under section 148 of the Act, then the same may be communicated on or before 01.10.2015. Thus, period of 15 days was given to the assessee. However, the assessee did not raise any objections even after four months since reasons were supplied to him on 25.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income had escaped assessment. Since the Assessing Officer was not supposed to frame assessment order at the stage of issuance of notice under section 147 of the Act; and where the assessee had not discharged the primary onus of proving genuineness of entries and then seeking of cross-examination of entry operators before discharging primary onus of proving cash credits as genuine was against the principles of Administrative Law. He further observed that there was another basis for reopening the assessment i.e. on the basis of documents found, wherein the assessee had made cash payments for purchasing piece of land. Since the assessee had not challenged the validity of reasons recorded on that aspect and hence, the objections raised by assessee were held to have no merit. 9. The assessee is in appeal against the order of CIT(A). 10. The learned Authorized Representative for the assessee before us has filed chronological sequence of events along with supporting documents. After taking us through the basic facts of case of furnishing the original return of income and assessment being framed under section 143(3) of the Act and thereafter, notice being issued under section 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee then, placed reliance on the following decisions:- i) GKN Driveshafts India Ltd. Vs. ITO (2002) 125 TAXMAN 963 (SC) ii) Nitin P. Shah alias Modi Vs. DCIT (2005) 146 TAXMAN 536 (Guj) iii) CIT Vs. Kelvinator of India Ltd. (2010) 187 Taxman 312 (SC) iv) Oracle India (P.) Ltd. Vs. ACIT (2017) 83 taxmann.com 368 (Del) v) Sabh Infrastructure Ltd. Vs. ACIT in W.P (C) 1357/2016, judgment dated 25.09.2017 11. He then referred that where the addition has been made without giving cross-examination of witnesses, then such addition cannot be sustained. In this regard, he placed reliance on the following decisions:- i) Kishinchand Chellaram Vs. CIT (1980) 4 Taxman 29 (SC) ii) Jalco Financial Services (P) Ltd. Vs. ITO in ITA No.2250/Del/2010, relating to assessment year 2001-02, order dated 31.01.2014. iii) CIT Vs. Pradeep Kumar Gupta (2008) 303 ITR 95 (Del) 12. He pointed out that both Assessing Officer and CIT(A) had relied on the decision of the Hon'ble High Court of Delhi in CIT Vs. Nova Promoters & Finlease (P) Ltd. (2012) 18 taxmann.com 217 (Del), which has been overturned. 13. The learned Departmental Representative for the Revenue in reply, stated that abatement of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issue of notice under section 148 of the Act. The said letter is placed at pages 3 and 4 (2) (in the case of Shri B.N. Agarwal). On 14.04.2014, the assessee had also sought inspection of file. The Assessing Officer vide letter dated 25.04.2014, placed at pages 7 and 8 of Paper Book, supplied reasons recorded for issue of notice under section 148 of the Act. We are referring to documents placed at pages 3 and 4 of assessee's Paper Book, wherein reason for reopening is mentioned as the search conducted on Shri Pravin Kumar Jain, who had under his control various paper companies, which were used to provide accommodation entries to various entities. The assessee was alleged to have taken loan and paid interest thereon. The total loan in various hands is Rs. 2.90 crores and interest paid is Rs. 1,14,742/-. Further, reference was made to search and seizure proceedings in the case of CIIL, wherein brother of assessee had admitted that he along with assessee had in equal share purchased piece of land at Ambethan and had made cash payment of Rs. 15 lakhs on 23.02.2007. The Assessing Officer then comments on the information passed by DDIT(Inv) and holds that in view thereof, the stated amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uested to communicate the same on or before 1st October, 2014 as it may not be possible for this office to address the same at a later date." (Underline provided by us for emphasis) 17. The assessee again files another letter dated 24.11.2014, again requesting for issue of copies of documents and an opportunity to cross-examination, which is placed at pages 12 and 13 of Paper Book. In this, the assessee requests for specific copies of documents, which reads as under:- a) Copy of letter dated 07/03/2014 officially forwarded by DGIT(Iv.) Mumbai. b) Copy of statement recorded u/s. 132(4) of Shri Praveen Jain c) It is noted from above said letter and alleged by you that "Shri Praveen Jain used to work on a laptop and used to maintain his parallel books of account on a pen drive." It is requested that in case any thing of assessee is found, provide us copies of the same. d) It is noted from above said letter and alleged by you that Shri Praveen Jain has stated that "I mostly provide accommodation entries through brokers who are known to me." It is requested to give details of who is the broker in this case. e) Copy of Page No. 6 to 15 of bundle No.1 seized from office of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment against assessee. The assessee has time and again asked for the copies of documents and even was ready to pay copying charges but the Assessing Officer had blatantly refused to give the documents on the premise that they have already been received by assessee. But no such evidences of such documents being handed over by DDIT(Inv) has been filed on record. Another aspect to be noted is that the Assessing Officer is relying on statements of two persons, the assessee had sought cross-examination of the said persons and of many evidences also, which have not been provided by Assessing Officer. Another aspect of the issue is that the Assessing Officer has purely relied on the statement of Shri Pravin Kumar Jain of having provided accommodation entries in order to first initiate re-assessment proceedings and then also to complete re-assessment proceedings but the copy of said statement made by Shri Pravin Kumar Jain has been refused by him. After the search proceedings, the assessee has even filed copy of affidavit of Shri Pravin Kumar Jain in this regard, but the same has not been commented on by the Assessing Officer nor referred to before making addition in the hands of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, we have already made reference to the said documents in paras 15, 17 and 18 hereinabove. The assessee has time and again asked for the copies of said documents but the same have not been supplied to the assessee. The assessee has also sought cross-examination of the persons whose statements were being relied upon to propose re-assessment in the hands of assessee, for which reasons were recorded for reopening the assessment but none of the cross-examinations have been allowed. The non-allowance of cross-examination has been held by the Hon'ble Supreme Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise in Civil Appeal No.4228 of 2006, judgment dated 02.09.2015 to be most fatal. We have already relied on the said ratio laid down in M/s. Jaydeep M. Kher Vs. DCIT in ITA No.973/PN/2013, relating to assessment year 2003-04, order dated 28.12.2016, wherein also the addition was made in the hands of said assessee on the basis of statements recorded of other person and the assessee had time and again sought for cross-examination which was not provided and it was held as under:- "16. The first plea raised by the assessee before us is lack of opportunity giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer on similar lines. Thereafter, the assessee approached the CIT(A) for suitable directions on 17.10.2012 and asked the Assessing Officer to hold the remand report. However, the Assessing Officer submitted remand report in total defiance and without complying with the directions of CIT(A). The said remand report was furnished on 22.10.2012. Thereafter, during the course of appellate proceedings, the assessee again made a request to the CIT(A) that his directions have not been complied with by the Assessing Officer and no examination of witness has taken place in his presence nor any cross-examination has been allowed but the CIT(A) goes one step ahead to say that the parties are related parties and there is no need to give cross-examination. He further holds that it seems to be tax planning between the parties in order to avoid the payment of taxes and dismissed the plea of assessee in entirety. 17. The issue which arises before us is whether where the assessee has not been given the copy of statement relied on by the Assessing Officer during the course of assessment proceedings and addition has been made in the hands of assessee on the basis of such recorded statement, then whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them." 20. The Hon'ble Supreme Court also observed that it was not for the Tribunal to guess work as for what purpose the appellant wanted to cross-examine those dealers. The Hon'ble Supreme Court was also against the manner in which the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of uniform application seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to 1.[1969] 2 SCC 262 ; 1970] AIR 1970 SC 150. 2.[1979] 2 SCC 455 ; [1979] 118 ITR 1 (SC). 3.1981] 1 SCC 664 ; [1981] 51 Comp Cas 210 (SC) construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstances where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil consequences must be consistent with the rules of natural justice. The expression 'civil consequences' encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life." 15. Thus, it is trite that unless a statutory provision either specifically or by necessary implication excludes the application of the principles of natural justice, because in that event the court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences for the party affected. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial." 22. In the facts of the present case before us, there is violation of principles of natural justice as the statement of Shri Aditya Dadhe which was made the basis for making addition was not given to the assessee by the Assessing Officer and his request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only to allow cross-examination of witnesses but also furnish the copies of all the seized documents relied upon and even the letter forwarded by DDIT(Inv). It is this letter which has been relied upon by Assessing Officer to carry out investigation against assessee. Hence, the same partakes the character of an evidence to be used against assessee and the principles of natural justice demand that such evidence which is to be used against assessee, then copy of the same should be made available to the assessee. The contents of said letter have been made available by the Assessing Officer, hence we do not understand what stopped him for making available the letter, copy of which was forwarded by DDIT(Inv). The perusal of assessment order reflects that the Assessing Officer has elaborately referred to the contents of said letter and relied upon the investigation carried out by DDIT(Inv) in order to reopen the assessment in the case of assessee. In the totality of the above said facts and circumstances, where the assessee has been denied copy of statement recorded and copy of letter issued by DDIT(Inv), which has been extensively relied upon by the Assessing Officer to record reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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