TMI Blog2019 (3) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... o mere share sale which is not akin to receipt of gift, loan, share capital, advance etc AO directed to delete the additions made in captioned appeals in so far as it relates to share sale proceeds and alleged commission portion is concerned. Impact of cross examination - denial of natural justice - HELD THAT:- We strongly rely on the following string of decisions of various courts to hold that when revenue strongly relies on statements of certain persons to implicate an assessee, principle of cross examination has to invariably followed if truth and justice needs to be found out. Thus on the issue of lack of cross examination and violation of principle of natural justice, we 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. 7210/Del/2018 AND ITA No. 7211/Del/2018 - - - Dated:- 1-3-2019 - SHRI H.S. SIDHU, JUDICIAL MEMBER For the Appellant : Sh. Kapil Goel, Adv. For the Respondent : Sh. S.L. Anuragi, Sr. DR. ORDER These aforesaid appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by ld CIT A dated 21/08/2018 are bad in law in as much as addition of ₹ 12,55,733/- is made violating principles of natural justice and on basis of vague show cause notice which was challenged and repudiated before AO for not offering cross examination of revenue s witness at place of assessment where back material referred is used against the assessee. 7. That on the facts and in the circumstances of the case and in law, ld CIT(A) erred in sustaining the action of AO in making addition of ₹ 12,55,733/- without appreciating that no opportunity is given to the assessee to be confronted with back material relied extensively in impugned orders like investigation wing report etc and no opportunity to cross examine the revenue s witness was given despite specific written request in this regard made to AO/CIT(A). 8. That on the facts and in the circumstances of the case and in law, ld CIT(A) erred in sustaining the action of AO in making addition of ₹ 12,55,733/- without appreciating that section 68 and section 115BBE which are not applicable to sale of shares as mentioned in impugned assessment order. 4. During hearing Ld AR has placed on record the writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-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 such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 6.1 If objectively and dispassionately section 68 of the Act is dissected following would be key ingredients of the same: 6.1.1 Firstly is requires that Where any sum is found credited in the books of an assessee maintained for any previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-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 or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words one lakh twenty thousand rupees , the words two lakh fifty thousand rupees had been substituted : Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words ten lakh rupees , the words twenty-five lakh rupees had been substituted.] (3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe49, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained. (4) Without prejudice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmetic. 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 entries of items of which no account is made at any time, is not a book of account in a commercial sense. 29. In different legislations the concept of books of account has been employed. One of such oldest legislation is the law of evidence. Section 34 refers to the words entries in books of account . Section 34 has been interpreted by various High Courts including the apex court. The Supreme Court in the recent judgment delivered in the case of Ishwar Dass Jain v. Sohan Lal, has observed as under (headnote) : Under Section 34 sanctity is attached in the law of evidence to books of account if the books are indeed 'account books', i.e., in original if they show, on their face, that they are kept in the 'regular course of business'. 30. So, the accounts under Section 34 means accounts which are maintained in the regular course of business. 31. The income-tax legislation has been using the term book or books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 credible accounting record provides the best foundation for filing returns of both direct and indirect taxes. Accounting is called a language of business. Its aim is to communicate financial information about the financial results. This is not possible unless the main objectives of the books of account are to maintain a record of business : to calculate profit earned or loss suffered during the period of time, to depict the financial position of the business ; to portray the liquidity position ; to provide up to date information of assets and liabilities with a view to derive information so as to prepare a profit and loss account and draw a balancesheet to determine income and source thereof. Thus, the term books of account referred to in Explanation 5 must answer the above qualifications. It cannot be understood to mean compilation or collections of sheets in one volume. The books of account referred to are those books of account which are maintained for the purposes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 u/s 68 of the Act (which phrase is also employed in section 69 and section 69A etc) can t be implanted by any other authority. This view is fortified by the following decisions:- INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ―D‖: NEW DELHI ITA No. 2835/Del/2015 (Assessment Year: 2012-13) Smt. Tripat Kaur Date of pronouncement 09/10/2018 If authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorized under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to perform an action on any particular issue, then it is that authority alone who should do that action. We draw support from various decision of Honorable High courts in 346 ITR 343 ( Bom) , 345 ITR 223 ( del ) and also of the Honourable supreme court Anirudhsinhji Karansinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 where in hon. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and subterfuge is adopted to prevent and deflect detection. This, however, does not give liberty to the authorities to disregard and authorize search and seizure operations without formation of requisite belief. Power and authority given to the authorities must be exercised in terms of the statute and not contrary to and in violation of jurisdictional requirements. Power, as given, also imposes an obligation on the authorities to satisfy jurisdictional pre-conditions for the exercise of power to be held to be valid and not bad and contrary to law Above passage and ingeminated words makes it luculent that . Power and authority given to the authorities must be exercised in terms of the statute and not contrary to and in violation of jurisdictional requirements. Power, as given, also imposes an obligation on the authorities to satisfy jurisdictional pre-conditions for the exercise of power to be held to be valid and not bad and contrary to law which fits in present facts fully. On jurisdictional fact , in recent decision of Madras high court in case of Karti Chidambram (2/11/2018) has succinctly observed that: 168. From the above judgments, it could be deduced that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 to pass the order. 8.2 Further my decision on incorrect applicability of section 68 of the act in present facts is supported by following chain of decisions which are respectfully applied and followed by the Tribunal: S.No. Particulars / Title of decision Bench (citation / Ref. No./ Order No. Held (Gist in brief) Relevant para. 1. Babbal Bhatia A bench Delhi ITAT ITA 5430 5432/Del/2011(08/06/2018) Para 19 (Para 14 to 26) 2.Zaheer Abdulhamid Mulani SMC Pune Bench (Before Ms Sushma Chowla and Shri Anil Chaturvedi) ITA 862/Pun/2017 (31.08.2018) Para 13 3. Latif Ebrahim Patel Mumbai A bench ITA 7097/Mum/2013 (23.03.2018) Para 7 Para 8 (Mumbai ITAT decisions in 164 ITD 296 160 ITD 605 followed) 4. Shamsher Singh Gill Delhi SMC Bench in ITA 2987/Del/2015 (28/02/2017) Para 4 to 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases were duly accepted so there was no reason to doubt the sales. It was submitted that the case of the assessee is squarely covered by the decision of this bench of the Tribunal in the case of ITO vs. M/s Vishal Holding and Capital Pvt. Ltd. in ITA no. 1788/Del/2009 order dated 17.07.2009 which has been upheld by the Hon'ble Jurisdictional High Court as reported in (2011) 200 Taxman 186 (Delhi). It was further, submitted that the issue is also covered by the order of the ITAT, Delhi Bench in the case of ITO vs. Goodwill Cresec Pvt. Ltd. in ITA No. 4151/Del./2010 order dated 25.01.2012. Reliance was also placed on the following cases laws :- 1. CIT vs. Sh. Udit Narain Aggarwal, ITA No. 560 of 2009, dt. 12.12.2012 2. CIT vs. Sudeep Goenka, ITA No. 468 of 2009, dt. 3.01.2013. 3. CIT vs. Anirudh Narain Aggarwal, ITA No. 195 of 2010, dt. 16.01.2013. It was pointed out that the same issue has been decided by the I.T.A.T. in assessee's own case in I.T.A.T. No. 1584/Del./2009 for the A.Y. 2002-03 vide order dated 13.11.2009, in assessee's favour (copy of the order was furnished which is placed on record) 12. We have considered the submissions of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2003-04, shall apply mutatis mutandis for assessment year 2004-05. 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 assessment year 2003- 04, shall apply mutatis mutandis for assessment year 2004-05. The Hon ble Delhi High Court in the case of Principal C.I.T. vs Jatin Investment Pvt. Ltd. [2017 ] TMI 342 (Delhi) held as follows :- 4. The ITAT agreed with the conclusions of the CIT (A) upon its independent examination of the record. It also discounted the Revenue's submissions that the investment shown in the book of accounts and reflected as assets in the side of the balance sheet, should have been properly treated and that in the absence of such treatment. Section 68 applies. The ITAT rejected this contention and held based up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al could be brought on record by the Assessing Officer to show that the transaction of the assessee was not genuine and the assessee actually paid any amount in cash to any person in consideration of cheque received by him from the authorized share broker. In absence of such a material being brought on record by the revenue, in my considered opinion, the transaction of the assessee which is supported by overwhelming documentary evidences cannot be impeached merely because share prices rose abnormally or other persons were involved in generation of bogus Long Term Capital Gain. Thus, in my considered opinion, the addition made u/s 68 of the Act of ₹ 23,51,714/- by the revenue is unsustainable. Sanjeev Jain Prop. M/s. S.K. Jewellers ITA No.3381/Del/2017 Assessment Year: 2013-14 DELHI BENCH G , NEW DELHI (date of order : 15.01.2019) Held 21. We find merit in the arguments advanced by the Ld. Counsel for the assessee that the shares have been sold at the rate as prevailing on the stock exchange at the time of sale and the share prices of all the scrip are closely monitored by the stock exchange and SEBI. Even if the prices have gone up artificially as alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts to hold that when revenue strongly relies on statements of certain persons to implicate an assessee, principle of cross examination has to invariably followed if truth and justice needs to be found out. Following recent jurisprudence as relied by Ld AR is supportive to my view: IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR ITA No. 997 to 1002/JP/2018 1119/JP/2018 M/s. Kota Dall Mill Date of Pronouncement : 31/12/2018. 11.1. Even otherwise, the assessment order is solely based on the report of the Investigation Wing Kolkata which in turn is nothing but the narration of the statements recorded during the investigation and the AO was having in possession the statement of only Shri Anand Sharma. Therefore, all these proceedings conducted by the Investigation Wing Kolkata were at the back of the assessee and hence the statement which is the foundation of the report of the Investigation Wing Kolkata as well as the assessment order cannot be accepted in the absence of giving an opportunity of cross examination to the assessee. We find that the assessee has insisted for cross examination during the assessment proceedings and further during the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciencies would amount to denial of opportunity and consequently would be fatal to the proceedings. The Hon ble Bombay High Court in the case of H.R. Mehta vs. ACIT, 387 ITR 561 (Bombay) has also considered the issue of not providing opportunity of cross examination in para 11 to 17 as under :- Thus the denial of opportunity to cross examine was considered by the Hon ble High Court which goes to the root of the matter and strikes at the very foundation of the assessment and, therefore, renders the assessment order passed by the AO not sustainable. The ld. A/R has submitted that Coordinate Bench of this Tribunal in the case of DCIT vs. Shri Prateek Kothari vide order dated 16th December, 2012 in ITA No. 159/JP/2016 has considered this issue in para 2.8 to 2.11 as under :- 2.8 We have heard the rival contentions and perused the material available on record. The transaction under question relates to unsecured loans taken by the assessee amounting to ₹ 1 Crores from M/s Mehul Gems Pvt Ltd during the impunged assessment year and not accepting the said loan transaction as a genuine transaction by the Assessing officer and the resultant addition made under section 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, further as per the information name and address of assessee and the Benami Concern through which accommodation entry of unsecured loans was provided is appearing in the list of beneficiaries to whom the said Group has provided. This admission is sufficient to reject the contentions of the asseesse. Further, regarding cross examination, the AO stated that the right of cross examination is not an absolute right and it depends upon the circumstances of each case and also on the statute concerned. In the present case, no such circumstances are warranted as in the list of beneficiaries to whom accommodation entries were provided by the said group categorically contains the name and address of the assessee. Further the group has categorically admitted to providing of accommodation entries of unsecured loans through various benami concerns. The AO further relied upon the decision of Hon ble Supreme Court in he case of C. Vasantlal Co. Vs. CIT 45 ITR 206(SC) and Hon ble Rajasthan High Court in case of Rameshwarlal Mali vs. CIT 256 ITR 536(Raj.) among others. In this regard, it was submitted by the assessee that if the entries and material are gathered behind th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing. The Hon ble Supreme Court in case of C. Vasantlal Co. Vs. CIT 45 ITR 206 (SC) has held that the ITO is not bound by any technical rules of the law of evidence. It is open to him to collect material to facilitate assessment even by private enquiry. But, if he desires to use the material so collected, the assessee must be informed about the material and given adequate opportunity to explain it. The statements made by Praveen Jain and group were material on which the IT authorities could act provided the material was disclosed and the assessee had an opportunity to render their explanation in that regard. The Hon ble Supreme Court in case of Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) (Copy at Case Law PB 585- 591) has held that whether there was any material evidence to justify the findings of the Tribunal that the amount of ₹ 1,07,350 said to have been remitted by Tilokchand from Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed by the AO relying solely on the information received from the investigation wing, statement recorded u/s 132(4) of Shri Bhanwarlal Jain and others, and various incriminating documentary evidence found from the search and seizure carried out by Investigation Wing, Mumbai on the Shri Bhanwarlal Jain group on 03.10.2013. It remains undisputed that the assessee was never provided copies of such incriminating documents and statements of Shri Bhanwarlal Jain and various persons and an opportunity to cross examine such persons though he specifically asked for such documents and cross examination. On the other hand, the burden was sought to be shifted on the ITA No. 159/JP/16 The ACIT, Central -2, Jaipur vs. M/s Prateek Kothari, Jaipur 21 assessee by the A.O. It is clear case where the principle of natural justice stand violated and the additions made under section 68 therefore are unsustainable in the eye of law and we hereby delete the same. The order of the ld CIT(A) is accordingly confirmed and the ground of the Revenue is dismissed. Thus when the assessee has specifically asked for cross examination of the witnesses whose statements were relied upon by the AO, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RL A. 276 of 2008, Delhi High Court, decided on 24.04.2014, whereby it was held that the denial of right to cross examine the witnesses would cause prejudice to the accused as statements of witnesses are not substantive evidence in themselves. It was held in the said judgement that delay is not a ground for disallowing the opportunity to cross examine witnesses. The court laid down that: ―18. The impugned order of the AO fails to discuss this aspect although it has noticed the submission of learned counsel for the appellants that the said statements had been retracted as they had been given under threat and coercion. In order to determine whether the claim of the appellants that they were subjected to torture, threat and coercion was a credible one, the SD sought to have permitted the appellants to cross-examine the officers of the ED who recorded the statements. As regards Prem Singh, his statement is stated to have been recorded by A.K. Narang, Assistant Director. The statement of Rajendra Singh was recorded by Devender Malhotra. Neither of these officers was tendered for cross-examination. In the considered view of the Court, in the context of the specific allegation th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia in Khem Chand Vs. Union of India AIR 1958 SC 300 has defined the meaning of the term ―reasonable opportunity‖ to include an opportunity to defined by cross-examining the witnesses produced against the accused. The Hon ble court held that: ―To summarize: the reasonable opportunity envisaged by the provision under consideration includes- (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; (b) An opportunity to defend himself by cross-examining the witnesses produced against him and by examining himself or any other witnesses in support of his defense; and finally (c ) An opportunity to make his representation as to why the proposed punishment should not be inflicted on him.‖ iv). The Hon‟ble Supreme Court of India in Ayubkhan Noorkhan Pathan Vs. The State of Maharashtra Ors. Decided on 08.11.2012, Civil Appeal No. 7728 of 2012 , after relying upon various authoritative judgments, has observed that cross-examination is an integral part and parcel of the Principles of Natural Justice. It held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review. ix). The Hon‟ble Supreme Court of India in New India Assurance Company Ltd., v. Nusli Neville Wadia Anr., AIR 2008 SC 876 , while considering a case under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, held that though the statute may not provide for cross-examination, the same being a part of Principles of Natural Justice should be held to be an indefeasible right. It was held as follows:- ―If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross-examine. The witness who intends to prove the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for making addition. iii. Whether the interim orders of The SEBI relied up on by the ld AO implicate the assessee for making addition u/s 68 of the act on alleged bogus longterm capital gains. iv. Whether Cash Trails of The buyers of the securities as stated by the ld AO makes the long-term capital gain of the assessee bogus. v. Whether the disclosure of some other persons as their undisclosed income of Long-term capital gain affects the case of the assessee also. vi. Whether de hors all the above facts addition in the hands of the assessee u/s 68 of long term capital gain can be made. Thus, it is apparent that the assessee has not been granted an opportunity of the cross-examination of Sri R. K. Kedia and Shri Manish Arora. The learned authorised representative has relied upon the decision of the Hon ble Supreme Court where in relying on case of state of Madhya Pradesh vs. Chintaman sadashiv Waishampayan AIR 1961 SC 1623 wherein in para number 11, It has been held referring another decision in Union of India vs. TR Varma ―stating it broadly and without intending it to be exhaustive, it may be observed that the rules of natural justice require that the party should h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order itself. On careful perusal of the decision of the Hon ble Supreme Court, it is noted that such direction were given by the Hon ble Supreme Court in the case of writ petition filed by the assessee before the Hon ble High Court and therefore Supreme Court held that the assessee could have gone before the Commissioner Appeals to agitate this issue of cross-examination and therefore the opportunity was available to the assessee at that particular point of proceedings. In the present case, assessee has also raised the same issue before the learned CIT A that cross-examination has not been provided to the assessee despite asking for the same. The learned CIT A has also brushed aside the above argument of the assessee without giving any plausible reason. Therefore, when the assessee has not exhausted all the judicial process before reaching to the higher forum, but has bypassed them by invoking the different rights, then in such circumstances, the violation of the principles of natural justice, such as not granting of opportunity of the crossexamination, becomes any regularity and not an illegality. However, when the assessee has exhausted all the remedies available to him by exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his document, it cannot be concluded that this represents the undisclosed income of the assessee. 65. The Hon'ble Supreme Court in the case of Andaman Timber Vs. CIT in Civil Appeal No. 4228 OF 2006 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 in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. 66. The ld. DR has strongly emphasized on the evidentiary value of the statement recorded u/s 132(4) of the Act and has relied upon several judicial decisions to support his contentions. The ld. DR further relied upon the provisions of section 132(4A) of the Act and 292C of the Act. These sections read as under: 70. It can be seen from the above chart that the case in which the presumption was available, the Revenue accepted what was returned by Shri R.K. Miglani and on the strength of his statement that the documents seized from his premises belong to distilleries, the additions have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. 15. We, accordingly, respectfully following decision of Hon ble Supreme Court in the case of Andaman Timber Industries versus CCE (supra) allow appeal of assessee on legal ground raised in Ground 2(c), and quash and set-aside the assessment order so passed. 15.1 As we have allowed assessee s appeal on Ground 2(c), other grounds raised by assessee becomes academic in nature which do not require any adjudication at this stage. Recent coordinate and division Pune bench ITAT decision in case of Brijendra Nath Agarwal (ITA 1666/Pun/2015) date of order: 29/11/2018 has held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether fatal to the assessment proceedings. The Assessing Officer alleges that the documents were provided by DDIT(Inv). However, it is not clear as to copies of what documents have been given by DDIT(Inv). In any case, the investigation was carried out not in the hands of assessee but in the hands of other person, so once the assessee asks that the documents be issued to it on which reliance is placed upon for reopening the assessment, then it was incumbent upon the Assessing Officer to provide the same to the assessee in order to enable the assessee to peruse the same and then point out whether by relying on the said documents, the re-assessment has been validly reopened. May be, the letter which is forwarded by DDIT(Inv) to the Assessing Officer is an internal document and the Assessing Officer has provided gist of the same to the assessee. However, there are other documents the assessee has asked for i.e. copies of page No.6 to 15 of bundle No.1 seized from the office of CIIL, Bhosari, the details of Directors of the companies as mentioned in the said letter. In addition, the assessee had sought cross-examination of different persons whose statements / materials seized from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable 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 reasons for reopening the assessment and failure of Assessing Officer in not providing cross-examination of witnesses in order to enable the assessee to meet the case of both reopening and also the assessment being carried out against the assessee on the basis of such statements, violates the basic fundamental principle of natural justice and in such scenario, the assessment which has been completed against the assessee cannot stand. Accordingly, we hold so. 24. The Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is both invalid and bad in law. The grounds of appeal No.1 to 3 raised by assessee are thus, allowed. We humbly request that instant proceedings may please be quashed on this count only that Ld AO has chosen not to supply any back material referred in reasons recorded namely investigation wing report letter etc and even cross examination is never offered with reference to statement of searched person if any , so entire proceedings are bad in law. Recently Delhi ITAT A bench decision in case of Ashtech Industries Private Limited (20/12/2018) has clearly held that We further note that AO supplied the reasons recorded (without approval) to assessee (as placed in paper book before us) which were objected before the AO in detailed manner vide objection letter dated 27.04.2016 in which note worthy aspect is assessee specifically sought from AO copies of back material referred in reasons including investigation wing report/letter, seized documents etc referred therein, AO without confronting any back material as evident from objection disposal order dated 17.05.2016 rejected assessee s objection challenging reopening action. In various letters placed in paper book and referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly following in various rulings consistently is also complete answer to contrary revenue argument which cant be accepted. In this connection, there is one recent division bench decision of this Hon ble Tribunal where one Pradeep Jindal statement was made as basis to draw adverse inference and sans cross examination of that person it is held by this Tribunal in case of Reeta Singhal in ITA No.4819/DEL/2018 order dated 17/01/2019 held (DELHI BENCHES CAMP AT MEERUT)that: ..6. On appeal, Ld. CIT(A) deleted the addition mainly on the ground that the sum of ₹ 50 lac received by the assessee was towards sale consideration of shares of M/s. Shri Ganga Paper Mills Pvt. Ltd. at face value on which the assessee had not earned any capital gain. The shares already existed in the balance sheet of the assessee in the Assessment Years 2006- 07 and 2009-10. Further, the assessee was not allowed crossexamination of the maker of the statement that the assessee received accommodation entry of ₹ 69 lac in the guise of sale consideration of shares, and therefore, the statement of the persons cannot be used against the assessee for making addition u/s.68 of the Act and relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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