TMI Blog2006 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... nal grounds of appeal: "1. On the facts and in the circumstances of the case, the said assessment deserves to be annulled/set aside, as no proper notice had been served on your appellant for fixing up the hearing in the case." 2. On the facts and in the circumstances of the case, the learned AO was not justified in proceeding with the assessment without first examining Shri Raj Kumar Seth and Shri Krishna Kumar Pittie and offering them for cross examination by your appellant and on this ground as well the assessment deserves to be annulled/set aside. 3. On the facts and in the circumstances of the case, the learned AO was not justified in adding an amount of Rs. 94,56,500 to the income of your appellant. 4. On the facts and in the circumstances of the case, the levy of interest under ss. 234B and 234C is illegal as the assessment order does not state that such interest is to be levied." 2. Briefly stated, the facts of the case are that the Enforcement Directorate had carried out searches under s. 37 of the Foreign Exchange Regulation Act, 1973 ("FERA" in short) on 8/9th March, 1994 at the business premises of M/s Pittie Finance Ltd., 705, Raheja Centre, Nariman Point, Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een summarized by the AO at p. 4 of the original assessment order. The entire case of the Department, as made out in the original assessment order turned on three important pieces of evidence, namely (i) the statement of the assessee himself as recorded by the FERA authorities at the time of search; (ii) the statements of third parties, namely, Shri R.K. Seth and Shri K.K. Pittie recorded by the FERA authorities at the time of search; and (iii) documents recovered by the FERA authorities from the premises of third party, namely, Shri R.K. Seth. 3. Aggrieved by the original assessment order, the assessee preferred appeal before the first appellate authority, namely, the CIT(A). It was his case before him that the assessee together with his brother Shri Krishna Kumar Pittie had moved an application for bail before the CMM, Esplanade Court, Mumbai on the same date, i.e., 9th March, 1994 on which his statement was recorded under s. 40 of the FERA in which they, inter alia, stated, that their statements were recorded under tremendous force, coercion, pressure, threats and assault and hence they submitted that their statements were neither voluntary nor true. In this view of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IT Act repeating the addition of Rs. 94,56,500 as originally made. The AO has made ex parte assessment on the ground of non-compliance of notices issued by him under s. 143(2) of the IT Act. Aggrieved by the aforesaid action of the AO, the assessee once again carried the matter in appeal before the CIT(A) without success. The assessee is now in appeal before this Tribunal. I 6. At the time of hearing before us the learned counsel for the assessee invited our attention to the factual aspects of the case, which we have already stated above. In brief, the submissions made by the learned counsel for the assessee run as under: (i) His first submission is that the AO has made the present assessment in utter disregard of the principles of natural justice. He submits that the AO has not supplied copies of the statements of Shri K.K. Pittie and R.K. Seth though he has used them against the assessee. He further submits that the AO has not supplied copies of the documents recovered from the possession of the aforesaid two persons before using them. He also submits that the AO has not extended any opportunity to the assessee to cross-examine both the aforesaid persons before using th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under the FERA without independently examining the relevant pieces of evidence, both oral as well as documentary and without putting them to the assessee. (v) His fifth submission is that the action of the AO in framing ex parte assessment is null and void for two reasons: one, there is no non-compliance with the notices issued by the AO under s. 143(2) and hence the mandatory conditions for invoking s. 144 are not fulfilled, and two, the mandatory show-cause notice required to be issued in terms of the first proviso to s. 144 was neither issued by the AO nor served upon the assessee and hence the ex parte assessment made by the AO was void and of no legal effect. (vi) His sixth submission is that the ex parte assessment order passed by the AO in. utter disregard of the principles of natural justice, the directions of the CIT(A) and the mandatory statutory provisions should be declared to be a nullity without giving any further opportunity to the AO as such an opportunity has already been extended by the CIT(A) in the earlier round of litigation. (vii) His seventh submission is that the subscriptions made by NRIs in Pittie Finance Ltd. have been accepted as genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri K.K. Pittie and Shri R.K. Seth as also about the nature of documents recovered from their possession and thus no prejudice was caused to the assessee. His alternative submission was that the AO could not provide the assessee with the copies of the statements of Shri K.K. Pittie and Shri R.K. Seth as also the copies/extracts of the documents recovered from their possession as the assessee himself was not coming forward to co-operate with the AO despite the directions given by the CIT(A). The learned Departmental Representative gave similar reason for not providing the opportunity to the assessee to cross-examine the aforesaid two persons, as per directions of the CIT(A). His fourth submission was that the assessment framed by the AO was not, in any case, null and void. According to him, it suffered, at the most, from procedural irregularities and hence the matter deserved to go back to the AO to remove those irregularities. His fifth submission was that the assessee was bound by his own statement given before the FERA authorities notwithstanding its retraction. In this connection, he relied upon the order of a co-ordinate bench of this Tribunal in Hiralal Maganlal Co. vs. Dy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive that the AO, for similar reason, could not provide the opportunity to the assessee to cross-examine them. In our view, the question is not whether the assessee was co-operating with the AO. The question is whether the AO has carried out the directions of the CIT(A). To ensure compliance with the directions of the CIT(A), the AO ought to have supplied/served the copies of the statements and documents by serving them on the assessee in the same way as a notice is required to be served under s. 282 of the IT Act. Likewise, he ought to have extended the opportunity to the assessee to cross-examine the third parties on whose testimony he was going to rely upon. It was not for the AO to presume whether the assessee would make use of the opportunities, which were legally required to be given to him. If the assessee had not made use of those opportunities, the AO would have well been within his powers to draw adverse inferences. We, therefore, find force in the submissions of the learned counsel for the assessee that the present assessment is bad in law as it has been made in violation of the directions given by the CIT(A). Learned Departmental Representative could not place any materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) was issued for hearing on 14th Feb., 2000. On 14th Feb., 2000 the Authorised Representative of the assessee again shown his inability to attend the hearing. Mr. Garg an employee of the assessee has shown his inability to furnish any additional evidence. However, none attended. On 8th March, 2000 again a notice under s. 143(2) was issued and final opportunity was given for hearing on 13th March, 2000. On 13th March, 2000 the Authorised Representative of the assessee stated that he did not get any response from the assessee and in such circumstances, he has shown his inability to furnish any further information. In view of the above facts and this being a time barring case, I have no alternative but to decide the case on the basis of material available on record." 11. It is evident from the above that the assessment order under appeal refers to four notices issued by the AO under s. 143(2) of the IT Act. It is stated in the assessment order itself that first notice dt. 23rd Dec., 1999 issued by the AO at Jodhpur address of the assessee fixing the case for hearing on 10th Jan., 2000 was not served on the assessee. Therefore, non-service of first notice dt. 23rd Dec., 1999 is ack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO and that there was non-compliance with the aforesaid notices after rejection of the requests for adjournments. It is fairly well-settled that where an application for adjournment is filed by the assessee, it is incumbent on the assessing authority, before proceeding to make a best judgment, to consider the same judiciously and to pass an order thereon. In the absence of such an order being passed, the best judgment assessment is liable to he vacated. In the case before us, no material has been placed before us to show that the requests for adjournment made by the Authorised Representative. were rejected by the AO. Even the assessment order is silent in this behalf. In the absence of rejection of the requests for adjournment, it is difficult for us to hold that there was noncompliance with the notices issued by the AO under s. 143(2) on the part of the assessee. It was therefore not open to the AO to pass ex parte order under s. 144. Mandatory conditions for invoking s. 144 in the present case are totally absent. On this ground also, the ex parte assessment order passed by the AO is invalid. 12. We also find force in the submission of the learned counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e be subversive of judicial discipline to relegate the matter back to the AO even when the AO has shown no regard to the directions given by the CIT(A). Repeated nonobservance of the principles of natural justice and failure to carry out the directions of a superior appellate authority are sufficient to quash the resultant assessment. The CIT(A) had conferred the jurisdiction on the AO for making the assessment in conformity with the directions given by the CIT(A) and not in derogation of his directions. The AO had no jurisdiction to make the present assessment without first carrying out the directions of the CIT(A). Keeping in view the aforesaid facts, we consider it appropriate to quash the assessment under appeal. We order accordingly. In this view of the matter, other issues raised by the assessee have become academic in nature and hence are not being decided. 14. The learned counsel for the assessee has cited several decisions in the course of his arguments before us. We have duly considered them without specifically referring to them in this order as the decisions cited by him contain broad principles of law, which we have already discussed above. Besides, the decision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
