IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.160/BANG/2015 ASSESSMENT YEAR : 2009-10 SHRI GOPALAKRISHNA SETTY NAMA, VENKATESWARA NILAYA, D.NO.11, 3 RD FLOOR, 34 TH CROSS, 2 ND BLOCK, RAJAJINAGAR, BANGALORE 560 010. PAN: AKFPG 9543D VS. THE INCOME TAX OFFICER, WARD 8(3) [NEW WARD 2(2)(2)], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.R. NULVI, CA RESPONDENT BY : SHRI A.R.V. SREENIVASAN, JT. CIT(DR) DATE OF HEARING : 26.07.2016 DATE OF PRONOUNCEMENT : 05.08.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED AGAINST THE ORDER OF THE CIT(APPEALS)-V, BANGALORE DATED 24.11.2013 FOR THE ASSESSMENT YEAR 2009-10 INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE AO IS AGAINST THE FACTS AND CIR CUMSTANCES OF THE CASE AND ARBITRARY AGAINST THE PRINCIPLE OF NATURAL JUSTICE. ITA NO.160/BANG/2015 PAGE 2 OF 6 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ACTION OF THE AO IS JUSTIFIED IN MAKING ADDITION OF RS. 77,56,000/- AS UNEXPLAINED CREDIT THOUGH THE DOCUME NTARY EVIDENCES WERE PRODUCED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT (A) ERRED IN ENHANCING THE INCOME BY RS. 75,00, 000/-, THOUGH THE CREDIT WERE MADE IN APPELLANT'S BANK ACC OUNT THROUGH PROPER BANKING CHANNEL AND BY IGNORING THE APPELLAN T PLEA OF VERIFYING THE CREDITORS BY CALLING THEM BY ISSUING THE SUMMONS U/S 131. 4. THE AUTHORITIES BELOW WERE ERRED IN APPRECIATING THE FACTS IN PROPER PROSPECTIVE MANNER AND WITHOUT MAKING FUR THER VERIFICATION ON REQUEST OF THE APPELLANT. 5. FOR THESE AND OTHER REASONS WHICH MAY BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS BEFORE THIS HO N'BLE BENCH TO DELETE THE ADDITION MADE BY THE AO AS WELL AS CIT ( A) OR SUCH OTHER ORDER WHICH THE HON'BLE BENCH MAY DEEM FIT. 6. APPELLANT CRAVES LEAVES TO ADD, TO ALTER, TO AME ND OR TO DELETE ANY OTHER GROUND DURING THE COURSE OF HEARIN G. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS RAISED THE ADDITIONAL GROUNDS WHICH ARE AS UNDER:- 7. ON THE FACTS AND CIRCUMSTANCES AND UNDER THE PROVIS IONS OF THE LAW, THE A.O & CIT(A) ERRED IN MAKING AND SUSTA INING THE ADDITION U/S 68 FOR THE CREDITS IN THE BANK PASS BO OK NOT IN THE BOOKS OF ACCOUNTS, FOR THE RELEVANT FINANCIAL YEAR THE APPELLANT HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS AS THERE I S NO INCOME FOR THE APPELLANT DURING THE SAID FINANCIAL YEAR. 8. ON THE FACTS AND CIRCUMSTANCES AND UNDER THE PRO VISIONS OF THE LAW, THE AUTHORITIES BELOW ERRED IN APPRECIATIN G THE FACT OF THE CASE THAT THE AMOUNT CREDITED IN THE PASS BOOK CONT RIBUTED BY THE PERSONS WHO ARE SIGNATORY TO MEMORANDUM OF UNDERSTA NDING ENTERED ON 01-08-2008. ITA NO.160/BANG/2015 PAGE 3 OF 6 3. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO THE ORDER OF THE LOWER AUTHORITIES WITH THE SUBMISSION THAT A SUBSTANTIAL CASH DEPOSIT OF RS.77,56,000 WAS FOUND IN THE ASSESSEES BANK AC COUNT. IN ORDER TO VERIFY THE SOURCE OF DEPOSITS IN THE ASSESSEES BAN K ACCOUNT, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND IN RESPONSE T HERETO, IT WAS EXPLAINED THAT THE ASSESSEE HAS ENTERED INTO MOU WI TH SHRI P.S. GURURAJ AND SHRI S. ANAND SETTY AND THROUGH THIS MOU, THE A SSESSEE HAS RECEIVED RS.2.5 CRORES FROM THE OTHER PARTY, OUT OF WHICH CA SH WAS DEPOSITED IN THE BANK ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO MADE ENQUIRY FROM SHRI P.S. GURURAJ, WHO IN RESPONSE THE RETO HAS DENIED HAVING GIVEN ANY MONEY IN CASH TO THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2009-10. HIS LETTER WAS CONFRONTED TO THE A SSESSEE AND ASSESSEE IN RESPONSE THERETO, HAS REQUESTED THE AO TO SUMMON SH RI GURURAJ U/S. 131 OF THE ACT, BUT THE AO HAS NOT SUMMONED SHRI GURURA J AND HAS NOT ALLOWED ANY OPPORTUNITY TO CROSS-EXAMINE SHRI GURURAJ. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SINCE THE AO HAS TAKEN COGNIZANCE OF THE LETTER OF SHRI GURURAJ WITHOUT ALLOWING THE ASSESSE E TO CROSS-EXAMINE SHRI GURURAJ, THE ADDITION MADE THEREON IS NOT SUSTAINAB LE IN THE EYES OF LAW. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CON TENDED THAT IT IS SETTLED POSITION OF LAW THAT WHEREVER THE AO INTEND S TO TAKE COGNIZANCE OF ANY EVIDENCE AGAINST THE ASSESSEE, THAT EVIDENCE SH OULD BE CONFRONTED TO HIM AND THE ASSESSEE SHOULD BE ALLOWED TO CROSS-EXA MINE THAT PERSON IF HE ITA NO.160/BANG/2015 PAGE 4 OF 6 EXPRESSES DESIRE. IN SUPPORT OF THIS PROPOSITION O F LAW, HE PLACED RELIANCE UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE C ASE OF MANOHARAN V. SIVARAJAN & ORS., CIVIL APPEAL NO.10581 OF 2013 . 5. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THA T THE AO HAS CONFRONTED THE INFORMATION RECEIVED FROM SHRI GURUR AJ TO THE ASSESSEE, THEREFORE, NOW THE ASSESSEE CANNOT QUESTION THE VER ACITY OF THE LETTER. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES, WE FIND THAT UNDISPUTEDLY CERTAIN HUGE AMOUNT OF CASH WAS D EPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND IN ORDER TO EXPLAIN THE DEPOSITS, THE ASSESSEE HAS TAKEN SHELTER THAT IT WAS DEPOSITED OUT OF THE CASH RECEIVED THROUGH MOU. THE AO HAS MADE ENQUIRY FROM SHRI GURURAJ, WH O HAS DENIED HAVING GIVEN ANY CASH AMOUNT TO THE ASSESSEE. IT IS ALSO EVIDENT FROM THE RECORD THAT THE ASSESSEE HAS WRITTEN TO THE ASSESSING OFFI CER TO SUMMON SHRI GURURAJ AND ALLOW THE ASSESSEE TO CROSS-EXAMINE HIM , BUT THE AO DID NOT ALLOW THE ASSESSEE TO CROSS-EXAMINE SHRI GURURAJ BY SUMMONING HIM. IT IS SETTLED PROPOSITION OF LAW THAT WHENEVER THE AO INT ENDS TO TAKE ADVERSE VIEW AGAINST THE ASSESSEE ON THE BASIS OF ANY EVIDE NCE, HE IS REQUIRED TO CONFRONT THE SAME TO THE ASSESSEE AND IF THE ASSESS EE DESIRES, HE MAY ALLOW THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES. IN THE LIGHT OF THIS LEGAL PROPOSITION, WE ARE OF THE VIEW THAT THE AO H AS WRONGLY TAKEN COGNIZANCE OF THE LETTER WRITTEN BY SHRI GURURAJ, W ITHOUT AFFORDING THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE HIM. WE A CCORDINGLY SET ASIDE ITA NO.160/BANG/2015 PAGE 5 OF 6 THE ORDER OF THE CIT(APPEALS) AND RESTORE THE MATTE R TO THE ASSESSING OFFICER WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH AND ALLOW THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE SHRI P.S. GURURAJ SO THAT TRUTH MAY COME OUT. 7. SO FAR AS THE ADDITIONAL GROUNDS ARE CONCERNED, WE ARE OF THE VIEW THAT WHENEVER CASH DEPOSITS ARE FOUND IN THE BANK A CCOUNT, ADDITION CAN BE MADE U/S. 69, IF NOT U/S. 68 OF THE ACT. IN ANY CASE, SINCE WE HAVE RESTORED THE MATTER BACK TO THE AO, THIS ASPECT MAY ALSO BE EXAMINED BY THE AO. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF AUGUST, 2016. SD/- SD/- ( A.K. GARODIA ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 5 TH AUGUST, 2016. /D S/ ITA NO.160/BANG/2015 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.