TMI Blog2019 (2) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... sproving the various documents filed by the assessee. Referencing to impact of lack of cross examination and violation of principle of natural justice, have no hesitation to accept the plea of Ld AR that lack of cross examination and violation of principle of natural justice results is total nullity of the entire addition, hence, the additions in dispute is hereby deleted. - Decided in favour of assessee. - ITA No. 7802/Del/2018, ITA No. 7804/Del/2018 And ITA No. 7806/Del/2018 - - - Dated:- 11-2-2019 - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Assessee : Sh. Kapil Goel, Adv. For The Revenue : Sh. S.L. Anuragi, Sr. DR. ORDER These aforesaid appeals have been filed by the respective assessee s challenging similar orders passed by Ld CIT(A)ppeals 16 New Delhi confirming AO s action disallowing long term capital gains exemption u/s 10(38) of the Income Tax Act, 1961 (in short the Act ) invoking deeming provisions of section 68 of the Act, hence, the same were heard together and are being disposed of by this common order for the sake of convenience, by dealing with the facts of ITA No. 7802/Del/2018 (AY 2015-16) in case of Smt. Anjul Bansal, which will app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore AO and Ld CIT(A) and in this context Ld AR has drawn my attention to following specific legal grounds raised in grounds of appeal : 2.1 That order passed by AO dated 30/12/2017 and further order passed by ld CIT A dated 11/07/2018 are bad in law in as much as addition of ₹ 20,82,925/- is made violating principles of natural justice without confronting any investigation wing report relevant extract, statements recorded by investigation wing , etc which is sufficient to quash the assessment order and order passed by Ld CIT(A) . 5. That on the facts and in the circumstances of the case and in law, AO and Ld CIT(A) erred in making and sustaining subject additions without appreciating that law gives discretion to the assessing officer in applying deeming fictions u/s 68 etc as firstly no books are there in existence before AO in which any sum is found credited therein so as to invoke section 68 of the Act vis a vis subject LTCG is concerned , and secondly opinion and satisfaction u/s 68 has not been objectively arrived in facts of present case on due application of mind thirdly assessee has no economic capacity and source to generate given amount of unaccounted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by Ld AR are devoid of merits and does not carry any legal weight. Finally Ld DR has relied on case laws referred in orders of AO and Ld CIT(A) praying for dismissal of all these appeals. 6. I have heard both the parties and perused the records. On due consideration of the entire conspectus of the case, I proceed to adjudicate the appeals on aforesaid three grounds. The first issue of applicability of section 68 of the Act, it is firstly appropriate to refer to text of section 68 of the Act: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly preceding the previous year; or ( ii) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year; or ( iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AE or section 44BB or section 44BBB, as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year; or 47[(iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,] keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act: 48[ Provided that in the case of a person being an individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account is considered in isolation, then, it may mean books in which merchants, traders and businessmen generally keep their accounts and are maintained for recording (a) all receipts and expenses with matters relating thereto; (b) all sales and purchases; and (c) the assets and liabilities. They are the documents and ledgers which must be prepared and kept by the business entity including the profit and loss account and the balance-sheet. In traditional terms, books means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. It may also be assumed that it connotes the intention that it should serve as a permanent record. At the same time, the term of account, i.e., to account, means to reckon, and it is difficult to conceive of any accounting which does not involve either additions or subtractions or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totalled or balanced, or both, as the case may be, there is no reckoning and no accounts. A book which merely contains entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The extracted subclause appearing hereinbelow will have to be understood properly and appropriate meaning will have to be assigned keeping in mind the backdrop in which the concept of books of account is referred to in Sub-clause (1) of Clause (b) of Explanation 5. The words used are : such income is, or the transactions resulting in such income are recorded . . . in the books of account, if any, maintained by him for any source of income .. . before the said date. 34. The term books of account referred to in Sub-clause (1) of Explanation 5 to Section 271(1)(c)means books of account which have been maintained for determining any source of income. The term source of income as understood in the Income-tax Act is to identify or classify income so as to determine under which head, out of the various heads of income referred to in Section 14 of the Act, it would fall for the purposes of computation of the total income for charging income-tax thereon. Thus, the term books of account referred to in this relevant sub-clause of Explanation 5 would mean those books of account whose main object is to provide credible data and information to file the tax returns. A cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts for the purposes of the tax legislation is honoured in the breach rather than the observance. 6.4 Above dictum leaves no room for any possible doubt that credit in bank account simply or any other raw information available to AO can t be loosely called as books of account u/s 68 of the Act. 7. Secondly it requires ..opinion on part of assessing officer vis a vis explanation of assessee if any which opinion in clear prescription of statute is exclusively reserved for assessing officer which is defined u/s 2 clause 7A as Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act so satisfaction required on part of AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by AO as sustained by Ld CIT(A) is held to be incorrect and reversed. Signification of correct assumption of jurisdiction is highlighted in the following decisions of Hon bl e Delhi and Madras High Court: IN THE HIGH COURT OF DELHI AT NEW DELHI + WRIT PETITION (CIVIL) No. 5937/2016 Reserved on : 10th May, 2018 Date of decision: 30th November, 2018 SHAH E NAAZ JUDGE ..... Petitioner ( speaking through His lordship as he then was Hon ble Justice Mr Sanjiv Khanna) 31. Authority and power to conduct search and seizure operations is strident and caustic power authorized by law to be taken recourse to when the conditions mentioned under different clauses of Section 132 (1) of the Act are satisfied. Constitutional validity of the said provision has been upheld due to the safeguards provided by the section itself, to prevent and check cases of abuse and misuse. Investigation and detection of economic offences is onerous and a difficult task, for often evidence and material is concealed and subterfuge is adopted to prevent and deflect detection. This, however, does not give liberty to the authorities to disregard and authorize search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is the view of Hon ble Delhi high court in case of JCB case reported at 398 ITR 189 wherein it is held that: 19. As already noted, the final assessment order of the AO stood vitiated not on account of mere irregularity but since it was an incurable illegality. Section 292B of the Act would not protect such an order. This has been explained by this Court in its decision dated 17th July 2015 passed in ITA No. 275/2015 (Pr. Commissioner of Income Tax, Delhi-2, New Delhi v. Citi Financial Consumer Finance India Pvt. Ltd.) where it was held: Section 292B of the Act cannot be read to confer jurisdiction on the AO where none exists. The said Section only protects return of income, assessment, notice, summons or other proceedings from any mistake in such return of income, assessment notices, summons or other proceedings, provided the same are in substance and in effect in conformity with the intent of purposes of the Act. 20. The Court further observed that Section 292B of the Act cannot save an order not passed in accordance with the provisions of the Act. As the Court explained, the issue involved is not about a mistake in the said order but the power of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. In his rival submissions, the Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee was having investment in shares etc. which were duly shown on the asset aside of the balance sheet, out of those investments some were sold and few new were purchased and if there was any gain on the sale the same was offered for taxation. It was further submitted that in earlier year under similar circumstances, the case was reopened u/s 147 of the Act and the addition made by the AO was deleted by the I.T.A.T. It was further submitted that the assessee sold the shares which were earlier purchased in different years and duly shown in the balance sheet of the respective years and that the assessee had shown the sale proceeds in the books of accounts, the investments were reduced after making the sales. It was contended that there was no obligation under the law that the assessee was required to prove the source of payee. It was further contended that the AO had not rejected the books of accounts and the purchases were duly accepted so there was no reason to doubt the sales. It was submitted that the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet's. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained. 14. We, therefore, considering the totality of the facts do not see any valid ground to interfere with the findings of the Ld. CIT(A). Accordingly, we do not see any merit in this appeal of the department. In ITA no. 4326/Del./2009 of the assessment year 2004- 05 identical issue having similar facts is involved, the only difference is in the amount of addition which was deleted by the Ld. CIT(A). Therefore, our findings given in former part of this order, in respect of 16 4325 4326/ Del/2009 assessment year 2003-04, shall apply mutatis mutandis for assessment year 2004-05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the entire conundrum of the matter: Lalit Kumar Aggarwal in ITA No. 3509/Del/2018 : Asstt. Year : 2014-15 DELHI BENCH SMC , NEW DELHI Date of Pronouncement: 24.01.2019 Held .. 21. I find that on examining the same and after making inquiries, no defect in the said documentary evidences could be brought on record by the revenue. The addition in question was made merely on the basis of suspicion and surmises. No material has been brought on record to show that the assessee was involved in the racket which was unearthed by the Investigation Wing of the department. The revenue could not point out that in anywhere in the statement of Sh. Sanjay Vora and/or Sh. Praveen Kumar Agarwal, the name of the assessee was stated by them. Therefore, simply because some persons were involved in generation of bogus Long Term Capital Gain cannot lead to conclusion that the assessee was also involved in it without cogent material. 22. Further, after making inquiries from the person, from whom, the assessee purchased the shares in question and/or from the share broker through whom the assessee sold the shares, no material could be brought on record by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rata High Court in the case of CIT-I Vs. Maheshchandra G. Vakil [2013] 40 taxman.com 326 (Gujarat) Hon ble Gujarata High Court in the case of CIT-I Vs. Himan M. Vakil [2014] 41 taxman.com 425 (Gujarat); Hon ble Punjab Haryana High Court in the case of Prem Pal Gandhi (supra) finally Held that The various other decisions relied on the Ld. Counsel for the assessee also support his case. Under these circumstances and in view of our above discussion we are of the considered opinion that the addition made by the Assessing Officer u/s 68 of the Act which has been sustained by the CIT(A) is not justified under the facts and circumstances of the present case. We, therefore, set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition 8.5 So respectfully applying ratio of above plethora of decisions to extant facts, I direct the AO to delete the additions made in captioned appeals in so far as it relates to share sale proceeds and alleged commission portion is concerned. 8.6 Now adverting to second issue framed above on impact of cross examination, I strongly rely on the following string of decisions of various courts to hold that when revenue stro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the said statement of Shri Anand Sharma cannot be the sole basis of assessment without giving an opportunity of cross examination to the assessee. The Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE (supra) while dealing with the issue of violation of principles of natural justice for not providing the opportunity of cross examination of the witnesses whose statements were relied on by the AO has held in para 6 to 9 as under :- Once the assessee has disputed the correctness of the statement and wanted to cross examine the witness which was not given by the AO as well as ld. CIT (A), then the orders passed based on such statement are not sustainable in law. The Hon ble Delhi High Court in case of CIT vs. Ashwani Gupta, 322 ITR 396 (Delhi) while dealing with the issue of not providing the opportunity to cross examine the witnesses has held in para 5 to 7 as under :- Thus the Hon ble High Court has held that once there is a violation of principles of natural justice inasmuch as seized material is not provided to the assessee nor is cross examination of the person on whose statement the AO relied upon, granted, then, such deficiencies would amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt regarding the genuineness of the transactions, it is incumbent on the assessee to produce the parties alongwith necessary documents to establish the genuineness of the transaction. In response, the assessee submitted that Shri Bhanwarlal Jain is not known to him and regarding various incriminating documentary evidences seized during the course of search and statements recorded of Shri Bhanwarlal Jain and other persons, he specifically requested the AO to provide copies of such incriminating documents and statement of all various persons recorded in this regard and provide an opportunity to the assessee to cross examine such persons. However, the AO didn t provide to the assessee copies of such incriminating documents and statements of various persons recorded and allow the cross-examination of any of these persons. While doing so, the AO stated that in his statements, Bhanwarlal Jain had described that they are indulged in providing accommodation entries of bogus unsecured loans and advances through various Benami concerns (70) operated and managed by them. This admission automatically makes all the transactions done by them as mere paper transactions and in these circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( Copy at Case Law PB 812-818) has held that The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Sinqh where it was stated that while proceeding under sub-section (3) of section 23, the Income-tax Officer, though not bound to rely on evidence produced by the assessee as he considers to be false, yet if he proposes to make an estimate in disregard of that evidence, he should in fairness disclose to the assessee the material on which he is going to find that estimate; and that in case he proposes to use against the assessee the result of any private inquiries made by him, he must communicate to the assessee the substance of the information so proposed to be utilized to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and that he should further give him ample opportunity to meet it. It was held in that case that In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sume that this letter was in fact addressed by the manager of the bank to the ITO, no reliance could be placed upon it, since it was not shown to the assessee until at the stage of preparation of the supplemental statement of the case and no opportunity to cross examine the manager of the bank could in the circumstances be sought or availed of by the assessee. It is true that the proceedings under the income-tax law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. 2.11 In light of above proposition in law and especially taking into consideration the decision of the Hon ble Supreme Court in case of C. Vasantlal Co. (supra) relied upon by the Revenue and which actually supports the case of the assessee, in the instant case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Ashwani Kumar Mehra Appellant Versus Shri A.H. Khan Directorate of Enforcement, Delhi Respondent CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN SHRI G.C. MISHRA : MEMBER JUDGEMENT FPA-FE-01/DLI/2018, FPA-FE-03/DLI/2018, FPA-FE- 04/DLI/2018 FPA-FE-05/DLI/2018 54. The Hon ‟ ble Supreme Court of India in the case of Ayaaubkhan Noorkhan Pathan v. State of Maharashtra others reported in (2013) 4 SCC 465, has inter alia held that the opportunity of cross-examination be made available, but it should be one of effective cross-examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice. The Constitution Bench of the Hon ‟ ble Supreme Court of India in State of M.P. v. Sadashiuva Vishampayan reported in AIR 1961 SC 1623, has also confirmed the principle that, the rules of natural justice require that a party should be given the opportunity of cross-examining a witness. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be no dispute that the action permitted under section 61 of the FERA, 1973 certainly results in drastic penal consequences (iv) The Hon ble Supreme Court of India in Ramesh Ahluwalia Vs. State of Punjab Ors. 2012 (10) SCALE 46 had observed that: ― 18. This is in conformity with the principle that justice must not only be done. Actual and demonstrable fair play must be the hallmark of the proceedings and the decisions of the administrative and quasi judicial courts. In particular, when the decisions taken by these bodies are likely to cause adverse civil consequences to the persons against whom such decision are taken. IV-A The Hon ble Supreme Court of India in Ashiwin S. Mehta and Anr. Vs. Union of India (UOI) and Ors. (2012) 1 SCC 83 had observed that: ― 27. It is thus, trite that requirement of giving reasonable opportunity of being heard before an order is made by an administrative, quasi judicial or judicial authority, particularly when such an order entails adverse civil consequences, which would include infraction of property, personal rights and material deprivation for the party affected, cannot be sacrificed at the alter of administra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for in the firm ‟ s books of accounts and excise duty had been paid thereof. The Court held that such a request could not be turned down, as the denial of the right to cross-examine, would amount to a denial of the right to be heard i.e. audi alteram partem. ( vii). In K.L. Tripathi v. State Bank of India Ors., AIR 1984 SC 273, the Hon ‟ ble Supreme Court has held that in order to sustain a complaint of violation of the Principles of Natural Justice on the ground of denial of opportunity to crossexamine, it must be established that some prejudice has been caused to the party by the procedure followed. A party which does not want to controvert the veracity of the evidence on record or does not want to controvert the testimony gathered behind its back cannot expect to succeed in any subsequent grievance raised by him on the ground that no opportunity of cross-examination was provided to him especially when the same was not requested and especially when there was no dispute regarding the veracity of the statement. ( viii). In Rajiv Arora v. Union of India Ors. , AIR 2009 SC 1100, the Apex Court held: ― Effective cross-examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pendency of the appeal to summon four witnesses for cross-examination, were not dealt with by the authorities below. It was held: ― 5. Non-summoning of the said witnesses for purposes of cross-examination has resulted in miscarriage of justice. ‖ 55. In the nature of the seriousness of present case, the right to cross examination would have been given in view of gravity of the matter. INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ―G ‖ : NEW DELHI ITA No. 1415 to 1417/Del/2018 (Assessment Year: 2013- 14 to 2015-16) Shri Brij Bhushan Singal Date of pronouncement 07/12/2018 It is not in dispute that assessee has furnished all the details such as purchase bills, allotment details, demat accounts, bank statements , details of payments by cheques and sale on BSE electronic platform, proof of payment of Securities Transaction tax and receipt of payment through Cheque by an independent broker, sale bills etc which is not doubted by the revenue. The facts have already narrated by us in earlier paras, which are undisputed by both the parties. only following issues are to be decided in this appeal:- i. Whether A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving an opportunity to the public officer to defend himself by crossexamining witness produced against him is necessary for following the rules of natural justice. Further, the decision of the Hon ble Supreme Court in case of Anadaman Timber industries vs. Commissioner of Central Excise (2015) 281 CTR 241 (SC) has held as under :- ―According to us, 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 inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even 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 to 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 opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is necessary because he is not aware what could be the purpose for the cross-examination asked by the assessee. Therefore not granting of opportunity of the crossexamination of the brokers Sri RK Kedia, Manish Arora, Ankur Agarwal, directors of the companies who have purchased shares from the assessee through electronic platform of the Bombay stock exchange/ NSE and various other people as were mentioned in the assessment order is fatal to the assessment made by the assessing officer. We are also conscious of the decision of the Hon ble Supreme Court in case of M. Pirai Choodi vs. ITO 334 ITR 262, wherein the Hon ble Supreme Court while considering the decision of the Hon ble MP High Court in 302 ITR 40 has held that not granting an opportunity of crossexamination to the assessee is merely an regularity and therefore the High Court was not correct in cancelling the order of the adjudicating authority. Therefore, Hon ble Supreme Court thought it fit to set aside the matter to the adjudicating authority with a direction to grant opportunity of crossexamination to the assessee. Before us, an issue arises that whether the matter should be set aside to the file of the learned assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Lords Distillery Limited, COMMON GRIEVANCE NO. 2 NO CROSS EXAMIANTION OF SHRI R.K. MIGLANI WAS ALLOWED BY THE REVENUE The ld. DR concluded by stating that ,in effect, Shri R.K. Miglani was an employee of the member of the UPDA and, therefore, there was no necessity for his cross examination. 64. The contention of the ld. DR that since Shri R.K. Miglani was related to the member distilleries of UPDA, therefore it was not necessary to allow cross examination is not acceptable. The Hon'ble High Court of Delhi in the case of Shri S.N. Aggarwal 293 ITR 43 has held as under: 11. In the present case the Assessing Officer has placed reliance on the statement of Smt.Sarla Aggarwal, daughter of the assessed while arriving at the conclusion, that the entries belong to the transactions of the assessed. This statement made by Smt.Sarla Gupta, cannot be said to be relevant or admissible evidence against the assessed, since the assessed was not given any opportunity to crossexamine her and even from the statement, no conclusion can be drawn that the entries made on the relevant page belongs to the assessed and represents his undisclosed income. It is also an admitted fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon which various allegations have been levied by Ld. AO. These factors from para 20 of assessment order, wherein assessee raised objections, one of which is opportunity to cross examine, in case of any evidence used against assessee. 12.3 To our surprise, Ld. AO without providing any material evidence, report on which he was relying and not granting an opportunity to cross examine the persons on whose statement he arrived at certain presuppositions, made addition in the hands of assessee. This is evident from para 22 of assessment order. 13. Before Ld. CIT (A) assessee once again raised plea of crossexamination granted to assessee and materials not based upon which the submissions have been made has not been provided for examination. Even then opportunity was not granted to assessee, though Ld. CIT (A) had coterminous powers as that of Ld. AO. 14. In our view this amounts to gross violation of principles of natural Justice. We draw our support from the decision of Hon ble Supreme Court in the case of Andaman Timber Industries versus CCE reported in (2015) 62 Taxmann.com 3, wherein Hon ble court observed as under: According to us, not allowing the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies 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 assessee. The issue which has been raised before us is whether in such circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even if we accept the reasoning of Assessing Officer that seized documents have been supplied to the assessee but no cross-examination of witnesses has been provided to the assessee. In such scenario, invoking of jurisdiction under section 147/148 of the Act gets affected as the assessee has a right to file objections to reopening of assessment and such a right of assessee has been violated. The learned Authorized Representative for the assessee has pointed out that in the absence of getting the documents relied upon and in not allowing cross-examination of witnesses, the assessee was not in a position to file objections against reopening of assessment. The jurisdiction is conferred upon the Assessing Officer for making re-assessment in the case of assessee only on the basis of aforesaid seized documents and the communication from DDIT(Inv), who in turn, has relied on the statements of various persons who were searched. Hence, in such circumstances, it was incumbent upon the Assessing Officer not 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order needs to be quashed and set aside. 25. The Hon ble Bombay High Court in Agarwal Metals and Alloys Vs. ACIT (2012) 346 ITR 64 (Bom) has propounded such a view in turn relying on the judgment of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Vs. ITO (supra). The learned Authorized Representative for the assessee has raised various issues of change of opinion in the case of Shri B.N. Agarwal, wherein original assessment was completed under section 143(3) of the Act. However, since we have decided the issue on the other aspects of case and held the assessment order invalid and bad in law, we are not addressing the same. It may be pointed out herein itself that since the Assessing Officer did not provide copies of statements and did not allow crossexamination, then the plea of assessee that it could not object to the reasons recorded for reopening the assessment has merits to be allowed and for such act, wherein no proper opportunity was given to the assessee to file objections to reassessment, proceedings initiated under section 147/148 of the Act cannot stand. There is no merit in the observations of CIT(A) that the assessee had participated in assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in Andaman Timber Industries case (Civil Appeal No. 4228 OF 2006) reported at 127 DTR 241 that violation of principle of natural justice (here withholding of back material referred in reasons which is specifically requested for repeatedly) is a serious flaw and results in nullity of the order so passed, which is squarely applicable to present case. All the above decisions squarely answers the serious wrong impression in mind of revenue authorities on principle of cross examination may be compromised or eschewed and excluded from income tax assessment proceedings where entire assessment is otherwise plagiarized and heavily influenced by statements recorded by investigation wing which cant be taken on board unless tested on terra ferma of cross examination which for reasons best known to revenue is not adhered in any of such cases. As discussed supra there are five judge constitution bench rulings from Hon ble Apex court (Hon ble Supreme Court of India in Khem Chand Vs. Union of India AIR 1958 SC 300; the Hon ‟ ble Supreme Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623 etc) holding not providing the said opportunity to crossexamine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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