TMI Blog2018 (11) TMI 1841X X X X Extracts X X X X X X X X Extracts X X X X ..... the question comes for the explanation. In the instant case, the AO has not proved with the documentary evidences that the assessee has incurred expenditure on account of commission expenses. Thus, in such case the question of explanation does not arise. AO before making the addition on the basis of statement should have provided the opportunity of cross examination to the assessee. In this regard, we find support and guidance from the judgment of Hon ble Supreme court in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] AO is directed to delete the Addition made by him. Hence, the ground of appeal of the assessee is allowed. - I.T.A. No. 3286/AHD/2016 - - - Dated:- 1-11-2018 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER For the Appellant : Shri Jaimin Shah, A.R. For the Respondent : Shri Dinesh Shah, Sr. D.R. ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax(Appeal)-5, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-5/ITO Ward.5(2)(2)/36/2015-16 dated 07-10-2016 arising in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee contented that it has not incurred/ paid any commission either to Tricon Construction or Tejas V. Shah partner of the firm. 4.2 The assessee further submitted that it has received advances from the certain parties against the sale of plot but no sale deed has been registered till date. The assessee further submitted that the Govt. of Gujarat has banned the construction on the plots hold by it. Thus, no transaction of sale/ purchase of such plots is carried out. However, the AO disagreed with the submission of the assessee and held that the moment advanced was received by it for the sale of plots, the assessee is under the obligation to pay the amount of commission to the agent who introduced the party to the assessee. 4.3 The AO also observed that Shri Tejas V. Shah has duly admitted in the statement for the receipt of commission income from the assessee as discussed above. In view of above, the AO held that the commission expense as discussed above has been incurred by the assessee outside the books of accounts. Accordingly, the AO made the addition of ₹ 7,69,243/- on account of commission expenses u/s 69C of the Act to the total income of the assessee. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission paid to M/s Tricon Construction u/s 69C of the LT. Act, 1961. Therefore on following grounds the appellant appeal may please me allowed. 01. The addition made U/s 69C without having any corroborative material on record. 02. The search was conducted in case of Tricon Construction and their partner Mr. Tejas V. Shah and statement under oath recorded is to be used for evidence in case of person searched and not for other parties without having corroborative material to prove the transactions are to be took place. 03. Statement recorded on oath cannot be used as evidence to made addition u/s 69C in case of third person without giving opportunity of cross examination. 04. No Addition can be made without issuing show case notice u/s 143(3) of the IT. Act. 1961. 05. The appellant has specifically denied any transaction with M/s Tricon Construction or with Tejas V. Shah, Further no any transaction in past or in future the done by the appellant with M/s Tricon Construction or Tejas V. Shah. Therefore the burden lies with the A.O. Which the A.O. fails to do. 06. No evidence found during the course of search or survey proceedings that the appellant has paid the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 4 that they have not incurred any expenditure and A.O. has no material to prove that the appellant has made any expenditure. Therefore the addition made only on the basis of statement of third party addition u/s 69C cannot be made. 10. The A.O. has made addition on the basis of statement of third party which must be a part of annexure to the assessment order, however the same has been not provided till today to the appellant is also against the principal of natural justice and therefore the addition made may please be deleted. 11. The project of the appellant is stopped due to Gujarat Government has issued the restriction on construction as well as sales transaction of the properties under question. The sale deed of any of the buyer not executed till date then the question of payment of commission does not arise. The Ld. A.O. has may inquire further because the appellant has given name of the booking holder. Even one of the plot No. 45 has not been allotted to any party then how the appellant has paid the commission. Therefore the addition made against the facts and circumstances of the case of the appellant is not sustainable on km and requires to be deleted. Your ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availability of such presumption as contained in s. 132(4A) during the course of assessment proceedings, the initial onus of proving that the assessee was not the owner of seized material is on him as it is not in dispute that the material relied upon by the AO for making the addition was without dispute found and seized from him. Therefore, the learned Departmental Representative is right when he says that burden of proof lies on the assessee. But at the same time we are in agreement with the learned authorised representative for the appellant that before invoking the provisions of ss. 68, 69, 69A, 69B and 69C it will be essential to ensure the fulfilment of all the conditions precedent to the existence of unexplained investments/expenditure, etc., for which the onus lies on the Revenue. The relevant provisions can be invoked only if it is factually found that the assessee has made such investments or incurred such expenditure and it was assessee alone and none else who was the owner of such investments, etc. It will have to be further established by the Revenue that such amounts have not been recorded or/are in excess of the amounts recorded in the books of accounts, if any, mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer, the amount may be added to his income. 7. In the present case, there is nothing to show that the expenditure was in fact incurred by the assessee. The assessee had denied having incurred the expenditure and had contended that it did not have that kind of money. The Tribunal noted that the Assessing Officer had not made any enquiry whatsoever to find out whether such expenditure was actually incurred by the assessee. Since a part of the expenditure related to advertisements in newspapers, it could have been easily verified by the Assessing Officer, but he did not do so. 8. We find no fault in the view taken by the Tribunal since there is nothing on record to show that the expenditure was actually incurred by the assessee nor did the Assessing Officer take any action to find out whether the expenditure was actually incurred or not. 8.4 We also note that the AO failed to provide the opportunity of cross examination of the statement obtained under the provision of Act. In our considered view, the AO before making the addition on the basis of statement should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated to be substantial questions of law: [A] Whether the Appellate Tribunal is correct in law and on facts in not considering the statement of Shri Mukesh M. Chokshi taken on oath u/s.132(4) of the Act and is binding as evidence or not? [B] Whether the Appellate Tribunal is correct in law and on facts in deleting the additions without appreciating the fact that the assessee had not carried out share transactions through stock exchange and those transactions were carried out off market, thus should be treated as illegal and fraudulent or not? 2. Heard Mrs. Mauna Bhatt, learned senior standing counsel for the appellant and Mr. D.K. Puj, learned advocate for the respondent in the appeal. 3. The learned advocate for the respondent has drawn the attention of the court to the order dated 12.09.2017 passed by this court in the case of Principal Commissioner of Income Tax-5 v. Dhwani Mahendra Shah, rendered in Tax Appeal No.674 of 2017, to submit that in an appeal arising out of the common order of the Tribunal, raising identical questions, this court has dismissed the appeal and upheld the order passed by the Tribunal. It was submitted that therefore, for the same reasons, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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