TMI Blog2021 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... REME COURT] the assessment based on statement of third party without giving an opportunity to the assessee is not sustainable in law. The statement of a third party cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. In light of the same, we don t deem necessary to examine other contentions raised by the ld AR. The order so passed by the AO is hereby set-aside. The appeal of the assessee is thus allowed. - ITA No. 495/JP/2019, ITA No. 496/JP/2019 - - - Dated:- 20-1-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Sh. Sandeep Taneja (CA) For the Revenue : Smt. Runi Pal (Addl.CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. These are two appeals filed by the respective assessees against the orders of ld. CIT(A), Ajmer dated 08.01.2019 for A.Y 2010-11. Since the common issues are involved, both these appeals were heard together and are being disposed off by this consolidated order. 2. With the consent of both the parties, the case of Smt. Santosh Gupta, in ITA No. 495/JP/2019 is taken as the lead case for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.03.2011 declaring total income of ₹ 54,03,120/- which was processed u/s 143(1) of the Act. Subsequently, the notice u/s 148 was issued on 27.03.2017 after recording reasons to believe that income amounting to ₹ 1,49,950/- has escaped assessment within the meaning of section 147 of the Act. In response, the assessee filed her return of income on 10.04.2017 at total income of ₹ 54,03,120/- as originally filed. Subsequently, the notice u/s 143(2) and 142(1) were issued and the assessment was completed u/s 143(3) read with section 147 at an assessed income of ₹ 55,53,060/- holding that the assessee has misused facility of client code modification and she has shifted-in contrived loss of ₹ 1,47,000/- and in this way, she has reduced her taxable income. Further, an amount of ₹ 2,940/- was also added towards commission paid @ 2% on such accommodation to the brokers. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has since confirmed the said addition and now the assessee is in appeal before us. 4. During the course of hearing, the ld. AR raised the various contentions challenging the assumption of jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt clients to reduce their tax liability and also fictitious profit to other clients. In some cases of brokers as well as clients, survey u/s 133A was carried out and they confirmed having misused the facility of client code modification to create fictitious losses/profits and in transferring profits and losses from original clients to modified clients. From the details received, it was noticed that during the year under consideration assessee has shifted-in ascertained loss of ₹ 1,47,000/-. In this way, net reduction in income due to misuse of client code modification facility comes to ₹ 1,47,000/-. For taking in such contrived losses the assessee would have paid commission also. On the basis of statement of brokers, the AO estimate that the assessee would have paid commission @ of 2% which comes to ₹ 2,940 out of books of accounts. Basis the same, the reasons were recorded and notice u/s 148 was issued to the assessee. It was submitted that in this case, loss of ₹ 1,47,000/- on transaction of shares of Nifty NO was originally accrued to M/s Sandeep Stocks Pvt. Ltd. and this loss was shifted to the assessee through her broker M/s Maverick Share Brokers Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right of cross examination was denied by the ld CIT(A) who exercises the co-terminus powers as that of the AO. Thus, in view of the decision of the Hon ble Supreme Court in case of CCE vs. Andaman Timber Industries (supra), the assessment based on statement of third party without giving an opportunity to the assessee is not sustainable in law. The Hon ble Supreme Court in case of Andaman Timber (Supra) while dealing with the issue has held in para 5 to 8 as under:- 5. We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnana, learned senior counsel who appeared for the revenue. 6. According to us, not allowing the assessee to cross-examine the witness 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 as based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements ..... X X X X Extracts X X X X X X X X Extracts X X X X
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