TMI Blog2019 (7) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the assessee in view of the principles of natural justice. ANDAMAN TIMBER INDUSTRIES VERSUS CCE [ 2015 (10) TMI 442 - SUPREME COURT] which held 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. We also found that even same request was made before the ld. CIT(A) but the same was not considered and plea of the assessee was rejected. Therefore, the judgment of the Hon ble Supreme Court is hold precedent and the assessee s right to seek an opportunity for cross examination is justified and the rejection of the same resulted into nullity of the assessment itself in view of the decision of the Hon ble Supreme Court in the case of Andaman Timber Industries (Supra). GP estimation on bogus purchases - in so far as the profit declared in respect of purchases from these alleged parties were more than the profit declared in respect of other parties and the average profit declared during the year under consideration. We also found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not holding that the ld. A.O. erred in not providing an opportunity to cross examination to the appellant while relying on a third party statement as the same was also in violation of principles of natural justice. 03. Rival contentions have been heard and record perused. The facts in brief are that the case of the assessee was reopened on the basis of the information received from the office of the DGIT (Inv.). Mumbai that certain firms are engaged in the business of providing accommodation entries and out of such parties the appellant had also purchased goods from certain firms totaling to ₹ 1,81,71,990. Based on this information A.O. formed an opinion that income to the tune of ₹ 1,81,71,990 related to concealed income. In the assessment the Id. AO has disallowed a sum of ₹ 45,42,998 being 25% of above referred sum and added the same to the income of the assessee. 04. By the impugned order, the ld. CIT(A) upheld the reopening of the assessment but given substantial relief by estimating profit rate at 8.5%, accordingly, against the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation wing, Mumbai and reached on the conclusion of purchases being bogus. Our attention was also invited to the profit rate chart for earlier and subsequent assessment years so as to indicate that the profit rate declared by the assessee is comparative in all the years under consideration as under: Asstt. Year Turnover Gross Profit Profit Rate 2010-11 3,70,62,443 22,54,341 6.08% 2011-12 5,42,80,906 37,27,037 6.87% 2012-13 5,78,61,983 45,13,471 7.80% 2013-14 7,06,86,095 51,74,137 7.32% 2014-15 7,89,42,771 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion available on record, 1 have reasons to believe that income of ₹ 39,32,500/- chargeable to lax has escaped assessment as per clause (b) of explanation 2 of section 147 of the IT Act, 1961. Therefore, it is a fit case to issue notice u/s 148 of the I.T. Act, 1961. 09. In the reasons recorded for reopening, the A.O. stated that reopening was done on the basis of information received from DGIT (Inv.), Mumbai and on the basis of such information, he found his reason to believe that the income had escaped assessment. In the reassessment order passed U/s 143(3) r.w.s. 147 of the Act, the A.O. at various instances depicted his reliance on the borrowed information received from DGIT (Inv.), Mumbai rather than his own enquiry and satisfaction. It is precondition of Section 147 that the A.O. should form his own satisfaction based on credible enquiry and on the credentials of the facts of the case. He shall not act on the basis of borrowed satisfaction. However, in the present case, the A.O. has solely relied on the information forwarded by the Investigation Wing, Mumbai. For this purpose, reliance is placed on the following judgments which were decided on identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise, Kolkata-II CIVIL APPEAL NO. 4228 OF 2006 (Supreme Court) 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. 11. We also found that even same request was made before the ld. CIT(A) but the same was not considered and plea of the assessee was rejected. It was also submitted by the assessee before the ld. CIT(A) that the decision relied upon by the A.O. of the Hon ble Rajasthan High Court in the case of Rameshwar Lal Mali 256 ITR 536 was passed in the year 2002 and the Kolkata High Court in the case of Mahendra N Chatterjee (1977) Tax LR 1754 in the year 1977, however, the Hon ble Supreme Court s decision in the case of Andaman Timber Industries (Supra) was passed in the year 2006. Therefore, the judgment of the Hon ble Supreme Court is hold precedent and the assessee s right to seek an opportunity for cross examination i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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