PRAVEENCHAND MANMAL JAIN, THANE V. ACIT CIR 4, THANE

ITA 1780/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9854 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Reopening of assessment; Bogus purchase; Opportunity of being heard; Principle of natural justice; Accommodation entries; Reason to believe; Borrowed satisfaction
• Section: 143(3); 142(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1779 / MUM/20 16 ASSESSMENT YEAR: 2009 - 10 & ITA NO. 1780/MUM/2016 ASSESSMENT YEAR: 2011 - 12 SHRI PRAVEENCHAND MALMAL JAIN VS. ACIT CIR 4 5, INDO INDUSTRIES, ESTATE NO. 3 THANE NAVGHAR, VASAI E, THANE - 401208 PAN NO. ADOPJ6910B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHUPENDRA SHAH , AR REVENUE BY: SH RI M.V. RAJGURU, DR DATE OF HEARING : 21/04/2017 DATE OF PRONOUNCEMENT: 12/07/2017 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE FOR THE AY 2009 - 10 & 2011 - 12 ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 3, THANE AND ARISE OUT OF ORDE R U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). AS SOME COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS O F APPEAL FILED BY THE ASSESSEE FOR THE AY 2009 - 10 & 2011 - 12 ARE SAME. THE ONLY DIFFERENCE IS THE DISALLOWANCE OF RS.35,24,881/ - IN AY 2009 - 10 AND RS.29,49,700/ - IN AY 2011 - 12 ITA NO. 1779 & 1780 /MUM/201 6 2 MADE BY THE AO. WE BEGIN WITH T HE GROUNDS OF APPEAL FILED BY THE ASSESSEE FOR THE AY 2009 - 10 WHICH READ AS UNDER: I. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN REOPENING THE ASSESSMENT U/S 148 MERELY ON THE BASIS OF BORROWED SATISFACTION, PRESUMPTION AND SURMISES. II. IN THE FACTS AND THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN DISALLOWING RS. 35,24,881/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASES EVEN THOUGH THE PAYMENT FOR PURCHASES IS MADE FROM THE BOOKS BY A/C PAYEE CHEQUES AND CANNOT BE TERMED AS BOGUS EVEN THOUGH THE SAME HAS B EEN FULLY ALLOWED BY THE JURISDICTIONAL MUMBAI TRIBUNAL IN MANY CASES RECENTLY, WITHOUT ANY PROOF OF REFUND OF MONEY TO THE APPELLANT ONLY ON THE BASIS OF THE INFORMATION ON THE WEBSITE WWW.MAHAVAT.GOV.IN ABOUT 8 S USPICIOUS DEALERS WHOSE COPY OF STATEMENT RECORDED WERE NOT FURNISHED TO THE APPELLANT. III. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING ABOVE DISALLOWANCE BY OVERLOOKING SEVERAL CASE LAWS SUBMITT ED. IV. THE ASSESSING OFFICER WRONGLY CHARGED INTEREST U/S 234 AND INITIATED PENALTY U/S 271(1)(C). 3. IN A NUTSHELL, THE FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 30.09.2009 SHOWING TOTAL INCOME OF RS. 16,41,420/ - . THE ASS ESSEE IS A MANUFACTURER OF TABLET PUNCHES AND DIES. THE ASSESSING OFFICER (AO), HAVING GONE THROUGH THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA FOUND THAT THE ASSESSEE HA D OBTAINED BOGUS PURCHASE BILLS FROM THE ACCOMMODATION ENTRY PROVIDERS WITHOUT PURCHASING ACTUAL GOODS / MATERIALS FROM THEM. THEREFORE , THE AO ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON 28.06.2013. IN RESPONSE TO IT, THE ASSESSEE SUBMITTED THAT TH E RETURN OF INCOME FILED ON 25.09.2011 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT . THEN THE AO ISSUED NOTICE U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE REQUIRING THE ITA NO. 1779 & 1780 /MUM/201 6 3 ASSESSEE TO FURNISH CERTAIN DETAILS. AFTER VERIFICATI ON OF THE DETAILS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD INDEED SHOWN PURCHASES OF RS. 35,24,881/ - FROM THE REFERRED PARTIES BUT FAILED TO SUBMIT THE CONFIRMATIONS FROM THE SAID PARTIES. TH EREFORE, THE AO VIDE ORDER SHEET ENTRY DATED 27.05.2014 ASKED THE ASSESSEE TO EXPLAIN WHY THE ABOVE AMOUNT OF RS. 35,24,881/ - CLAIMED AS PURCHASES FROM VARIOUS PARTIES SHOULD NOT BE TREATED AS UNEXPLAINED PURCHASES AND ADDED TO THE TOTAL INC OME OF THE ASSE SSEE. IN RESPONSE TO IT , THE ASSESSEE SUBMITTED BEFORE THE AO THE FOLLOWING REPLY : THE ASSESSEE HAS PURCHASED RAW MATERIALS REQUIRED FOR BUSINESS FROM THE PARTIES MENTIONED SL NO NAME OF THE ENTRY PROVIDER MAHARASHTRA VAT NO F.Y. AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE BALANCE AS ON 31.03.2013 1. SAMARTH SALES SYNDICATE 27710602170V 2008 - 09 3,16,472/ - NIL 2. SHREEJI TRADERS 27970618226V 2008 - 09 6,09,090/ - NIL 3. MAA CHAMUNDA SALES 27940263950V 2008 - 09 2,50,950/ - NIL 4. SAMIR TRADING CORPORATION 27830386376V 2008 - 09 6,28,680/ - NIL 5. SHARIKA CORPORATION 27760254931V 2008 - 09 2,61,010/ - NIL 6. REAL TRADERS 27170626911V 2008 - 09 2,57,920/ - NIL 7. DURGA ENTERPRISES 27120530181V 2008 - 09 6,60,728/ - NIL 8. SHRI VALLABH TRADERS 27780557463V 2008 - 09 5,40,020/ - NIL THESE ARE GENUINE TRANSACTIONS AND I HAVE PARTLY PAID TO THEM ON VARIOUS DATES AGAINST THESE PURCHASES. IT IS UNDERSTOOD FROM THE SALES TAX DEPARTMENT (MVAT) OF MAHARASHTRA & FROM YOUR OFFICE THAT THESE ARE NOT GENUINE TRANSACTION AND THEY HAVE NOT PAID THEIR SALES TAX LIABILITIES. I HAVE ALSO TRIED TO CONTACT THEM BUT I COULD NOT ABLE TO CONTACT THEM DUE TO CHANGE OF ADDRESS & COULD NOT ABLE TO GET CONFIRMATION FOR THE SAME. TO MAKE THE MATTER SIMPLE & TO BUY PEACE OF MIND, I PROPOSE TO OF FER THE SAME PURCHASES OF RS. 35,24,881/ - AS ADDITION TO MY INCOME. I ALSO REQUEST YOU TO ALLOW ME TO CAPITALIZE THE BALANCE AMOUNT OUTSTANDING AS ON 31/03/2013 IN F.Y. 2013 - 14 RELEVANT TO A.Y. 2014 - 15 OF THESE PARTIES AS I AM OFFERING THESE AMOUNTS AS ADD ITION IN A.Y. 2009 - 10 & THERE WILL NOT BE ANY ITA NO. 1779 & 1780 /MUM/201 6 4 LIABILITY TO PAY IN FUTURE TO THESE PARTIES. THESE CAN BE TREATED AS CESSATIONS OF LIABILITY. I ALSO REQUEST NOT TO INITIATE ANY PENALTY PROCEEDING U/S 271(1)(C) AS THERE ARE GENUINE TRANSACTIONS BUT COULD NOT BE SUPPORT ED DUE TO NO COOPERATION FROM SUPPLIERS. THERE WAS NO MALAFIDE INTENTION TO CONCEAL THE INCOME. HENCE YOU WILL CONSIDER ABOVE REQUEST IN OUR FAVOUR. 3.1 THEREFORE, THE A.O. MADE AN ADDITION OF RS. 35,24,881/ - TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED PURCHASES. 4. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORDER OF THE AO BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) OBSERVED THAT THE GROUND REGARDING REOPENING OF ASSESSMENT U/S 148 OF THE ACT WAS NOT FILED ORIGINALLY ALON G WITH APPEAL MEMO BUT WAS RAISED IN THE FORM OF SUBMISSION BEFORE HIM. THE ASSESSEE HAD NOT RAISED OBJECTION AGAINST REOPENING OF ASSESSMENT BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. ALL THE MORE , THE AO HAD ISSUED NOTICE U/S 148 ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT REGARDING ACCOMMODATION BILLS PROVIDED BY ENTRY PROVIDERS TO THE ASSESSEE AND SUBSEQUENTLY, THESE ENTRY PROVIDERS HAD GIVEN STATEMENT S / AFFIDAVITS STATING THA T THEY HAD PROVIDED ACCOMMODATION BILLS WITHOUT DESPATCHING THE GOODS AND THE ASSESSEE WAS ONE OF THE BENEFICIARIES. IN VIEW OF THE ABOVE, THE LEARNED CIT(A) REJECTED THE ABOVE GROUND OF APPEAL OF THE ASSESSEE. 4.1 THE LEARNED CIT(A) OBSERVED THAT THE AO HAD ISSUED NOTICE U/S 148 ON 28.06.2013 AND THE ORDER U/S 143(3) R.W.S 147 WAS PASSED ON 2 0 .06.2014. THAT MEANS THE ASSESSEE HAD ALMOST 12 MONTHS TO FURNISH THE DETAILS BEFORE THE AO. HOWEVER, THE ASSESSEE FAILED TO FURNISH BEFORE THE AO EVEN THE CONFIRMAT ION FROM THE BOGUS PARTIES. THE LEARNED CIT(A) ALSO DISMISSED THE ARGUMENT OF THE ASSESSEE THAT ENOUGH TIME WAS NOT GIVEN TO FURNISH THE DETAILS AS EVEN BEFORE HIM THE ASSESSEE HA D NOT FILED THE CONFIRMATION. FURTHER THE LEARNED ITA NO. 1779 & 1780 /MUM/201 6 5 CIT(A) FOUND THAT THE ASSES SEE FAILED TO PRODUCE THE TRANSPORTATION BILLS, DELIVERY CHALLANS, INWARD STOCK REGISTER, OUTWARD STOCK REGISTER, CONSUMPTION DETAILS TO PROVE THE GENUINENESS OF THE PURCHASES. IN THE INSTANT CASE, THE ASSESSEE ADMITTED THE FAILURE ON HIS PART TO PROVE THE GENUINENESS OF PURCHASES AS CONFIRMATION WERE NOT FILED AND THEREFORE, THE ASSESSEE AGREED FOR ADDITION BEFORE THE AO TO BUY PEACE OF MIND. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE COULD HAVE PRODUCED COPY OF RETURN OF INCOME FILED ALONG WITH PROFIT & LOSS ACCOUNT AND BALANCE SHEET AND BANK STATEMENT OF HAWALA DEALERS BEFORE THE AO BUT FAILED TO DO SO. THE LEARNED CIT(A) CONCLUDED THAT THE ASSESSEES CONFESSION IN WRITING BEFORE THE AO WAS NOT A GENERAL CONFESSION AS IT WAS SUPPORTED BY INFORMATION AN D EVIDENCE RECEIVED FROM SALES TAX DEPARTMENT . THEREFORE, THE LEARNED CIT(A) UPHELD THE ADDITION OF RS. 35,24,881/ - MADE BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE FILE S A PAPER BOOK CONT AINI NG (I) NOTICE U/S 148 DATED 28.06.2013, (II) REPLY DATED 02.09.2013, (III) REASONS RECORDED BY AO FOR REOPENING, (IV) COMPUTATION OF TOTAL INCOME, (V) TAX AUDIT REPORT ALONG WITH ANNEXURES, (VI) FULL SET OF AUDITED BALANCE SHEET, P&L ACCOUNT ALONG WITH CAP ITAL A/C, (VII) COPY OF ASSESSMENT ORDER, (VIII) DETAILS OF PURCHAS ES FROM 8 PARTIES, (IX) G R OSS PROFIT RATIOS OF A.Y. 10 - 11, 11 - 12 & 12 - 13, (X) XEROX COPY OF AFFIDAVIT, (XI) APPELLATE ORDER DATED 01/01/2016, (XII) LETTER OF AUTHORITY ON STAMP PAPER OF RS. 500/ - , (XIII) CASE LAWS IN THE CASE OF CIT VS. M/S EVEREST KENTO CYLINDERS LTD IN ITA NO. 1165 OF 2013 (BOM.), H.R. MEHTA VS. ACIT (2016) 72TAXMANN.COM 110 (BOM.), CIT VS. ASHISH INTERNATIONAL IN ITA NO. 4299 OF 2009 (BOM.), RAJEEV G KALATHIL 6727/M/12, GA NPATRAJ A SANGHAVI (ITA NO. 2826/MUM/2013) , RAMESH KUMAR & CO . APPEAL ITA NO. 1779 & 1780 /MUM/201 6 6 NO. 2959/MUM/2014, DEEPAK POPATIAL GALA (ITA NO. 5920/MUM/13) , RAMILA P SHAH (ITA NO. 5246/M/13) , PARESH GANDHI (ITA NO. 5706/M/2013), HIRALAL CHUNILAL JAIN (ITA NO. 4547/M/14), TARLA SH AH (ITA NO. 5295/M/2013), M/S. IMPERIAL IMP & EXPENDITURE (ITA NO. 5427/M/2015). 6 . ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER OF THE LD. CIT(A). HE STATES THAT IN THE INSTANT CASE THE ASSESSEE HAS OFFERED PURCHASES OF RS.35,24,881/ - AS ADDITION TO HIS INCOME TO MAKE THE MATTER SIMPLE AND TO BUY PEACE OF MIND. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH THE 1 ST GROUND OF APPEAL. IN THE INSTANT CASE , THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE AY 2009 - 10 ON 30.09.2009 DECLARING TOTAL INCOME OF RS.1 6,41,420/ - . THE AO HAVING GONE THROUGH THE INFORMATION FROM THE SALES TAX DEPARTMENT, MAHARASHTRA AND THE LIST OF ACCOMMODATION ENTRY PROVIDERS AND BENEFICIARIES AVAILABLE IN THE PUBLIC DOMAIN FOUND THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM THE ACCOMMODATION ENTRY P ROVIDERS WITHOUT PURCHASING ACTUAL GOODS/ MATERIALS FROM THEM. 7.1 THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT U/S 148 IS PRODUCED BELOW: SUBSEQUENTLY, INFORMATION HAS BEEN RECEIVED FROM SALES TAX DEPARTMENT, MAHARASHTRA GIVING NAMES AND ADDRESSES AND OTHER DETAILS OF CERTAIN PERSONS WHO HAVE PROVIDED ACCOMMODATION ENTRIES FOR BOGUS PURCHASES TO A LARGE NUMBER OF TAX - PAYERS WHO ARE THE BENEF ICIARIES. THE INFORMATION RECEIVED ALSO CONTAINS THE DETAILS OF THE BENEFICIARIES OF SUCH BOGUS BILL S. THE SALES TAX AUTHORITIES HAVE ALSO PROVIDED EXTRACTS OF STATEMENTS OF THE BILL PROVIDERS RECORDED BY THEM AND ALSO EXTRACT OF AFFIDAVITS FILED BY THE ITA NO. 1779 & 1780 /MUM/201 6 7 BILL PROVIDERS DURING THE COURSE OF THEIR INVESTIGATION OF THE HAWALA BUSINESS. AS PER THESE STATEMENT S AND/OR AFFIDAVITS, IT IS SEEN THAT THE PERSONS WHO HAVE PROVIDED ENTRIES TO VARIOUS BENEFICIARIES HAVE STATED THEREIN THAT THEY HAVE INDULGED IN BOGUS BILLING UNDER VARIOUS NAMES WITHOUT SUPPLYING THE ACTUAL GOODS/MATERIALS AS MENTIONED IN THE BILL. 3. T HE NAME OF THE ABOVE ASSESSEE ALSO APPEARS IN THE LIST OF PERSONS WHO HA VE OBTAINED BOGUS PURCHASE BILLS FROM THE ACCOMMODATION ENTRY PROVIDERS. DETAILS OF BOGUS PURCHASE BILLS TAKEN BY THE ASSESSEE INCLUDE THE FOLLOWING: S. NO. NAME OF THE ENTRY PROVIDER MAHARASHTRA VAT NO. F.Y. AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE 1. SAMARTH SALES SYNDICATE 27710602170V 2008 - 09 316472 2. SHREEJI TRADERS 27970618226V 2008 - 09 609090 3. MAA CHAMUNDA SALES 27940263950V 2008 - 09 250952 4. SAMIR TRADING CORPORATION 2783038637V 2008 - 09 628680 5. SHARIKA INCORPORATION 2776025493V 2008 - 09 261019 6. REAL TRADERS 27170626911V 2008 - 09 257920 7. DURGA ENTERPRISE 27120530181V 2008 - 09 660728 8. SHREE VALLABH TRADERS 27780557463V 2008 - 09 540020 4. IT IS CLEAR FROM THE ABOVE THAT THESE PURCHASES ARE BOGUS AND BILLS FOR THESE HAVE BEEN OBTAINED BY THE ASSESSEE FROM ENTRY PROVIDERS TO INFLATE ITS PURCHASE, AS A RESULT OF WHICH, THE INCOME OF THE ASSESEE FOR AY 2009 - 10 HAS BEEN UNDERSTATED BY THE ASSESSEE. THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR AY 2009 - 10. 5. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE FOR AY 2009 - 10 TO THE TUNE OF RS.35,24,881/ - HAS ESC APED ASSESSMENT WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE I.T. ACT. 6. ACCORDINGLY NOTICE U/S 148 IS ISSUED. 7.2 IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD . 291 ITR 500 (SC) THAT INTIMATION U /S 143(1) (A) IS NOT AN ASSESSMENT AND THEREFORE, THE NOTICE ISSUED ITA NO. 1779 & 1780 /MUM/201 6 8 U/S 148 IS VALID. ALSO IN THE CASE OF KONE ELEVATOR INDIA P. LTD. VS. ITO (MAD) 340 ITR 454, CIT VS. IDEAL GARDEN COMPLEX P. LTD. (MAD) 340 ITR 609 AND ACIT VS. MAERSK GLOBAL SERVICE CENT RE (INDIA) (P) LTD . (ITAT, MUM) 66 DTR 90 , IT HAS BEEN HELD THAT IF THE RETURN IS PROCESSED U/S 143(1), THE ONLY CONDITION TO BE SATISFIED FOR REOPENING IS TAXABLE INCOME HAS ESCAPED ASSESSMENT AND THE ASSESSEES PLEA THAT NO FRESH MATERIAL BEFORE THE AO W ARRANTING REOPENING IS NOT RELEVANT. 7.3 IN THE INSTANT CASE THERE WAS SPECIFIC INFORMATION BEFORE THE AO FROM THE SALES TAX DEPARTMENT, MAHARASHTRA ABOUT THE ASSESSEE WHO OBTAINED BOGUS PURCHASE BILLS FROM THE ACCOMMODATION ENTRY PROVIDERS. THEREFORE, THE AO HAS RIGHTLY REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. IN VIEW OF THE ABOVE, THE 1 ST GROUND OF APPEAL IS DISMISSED. 7.4 NOW, WE TURN TO THE 2 ND AND 3 RD GROUND OF APPEAL. WE FIND THAT IN RESPONSE TO THE ORDER SHEET ENTRY DATED 27. 0 5 .2014 BY THE AO, THE ASSESSEE OFFERED PURCHASES OF RS.35,24,881/ - TO TAX. THE ASSESSEE OFFERED IT TO MAKE THE MATTER SIMPLE AND TO BUY PEACE OF MIND. THE AO COMPLETED THE ASSESSMENT ON 20.06.2014. WE FIND THAT THE ASSESSEE HAS RAISED THE ISSUE OF CROSS - E XAMINATION BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS MENTIONED THE SAME AT PAGE 12 - 14 OF HIS APPELLATE ORDER FOR THE AY 2009 - 10 AND AT PAGE 16 - 1 8 FOR THE AY 2011 - 12. THIS ASPECT OF PROVIDING THE ASSESSEE AN OPPORTUNITY CROSS - EXAMINE THE PARTIES HA S BEEN OV ERLOOKED BY THE LD. CIT(A). WE ARE OF THE CONSIDERED VIEW THAT A PROPER HEARING MUST ALWAYS INCLUDE A FAIR OPPORTUNITY TO THOSE WHO ARE PARTIES IN THE CONTROVERSY FOR CORRECTING OR CONTRADICTING ANYTHING PREJUDICIAL TO THEIR VIEW. CROSS - EXAMINATION IS ALLOWED BY PROCEDURAL RULES AN D EVIDENTLY ALSO BY THE RULES OF NATURAL JUSTICE. ANY WITNESS WHO HAS ITA NO. 1779 & 1780 /MUM/201 6 9 BEEN SWORN ON BEHALF OF ANY PARTY IS LIABLE TO BE CROSS - EXAMINED ON BEHALF OF THE OTHER PARTY TO THE PROCEEDINGS. A PARTY MUST BE GIVEN A FAIR CHANCE TO CROSS - EXAMINE THE WITNESS. IN STA TE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, THE HON'BLE SUPREME COURT RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECESSARILY CARRY WITH IT THE RIGHT T O EXAMINE THE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS EXAMINE WITNESSES. IN THE CASE OF ITO VS. M. PIRAI CHOODI [2012] 20 TAXMANN.COM 733 (SC), THE HON'BLE HIGH COURT HAS SET ASIDE THE ORDER OF ASSESSMENT ON THE GROUND THAT NO OPPORTUNITY TO CROSS EXAMINE WAS GRANTED, AS SOUGHT BY THE ASSESSEE. THE HON'BLE SUPREME COURT HELD THAT: WE ARE OF THE VIEW THAT THE HIGH COURT SHOULD NOT HAVE SET ASIDE THE ENTIRE ASSESSMENT ORDER. AT THE HIGHEST, THE HIGH COURT SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THE CONCERNED WITNESS. 7 .5 THE ISSUE IN THE INSTANT CASE CAN BE RESOLVED BY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISIONS. THEREFORE, THE ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO OF RS. 35,24,881/ - IN AY 2009 - 10 AND RS.29,49,700/ - IN AY 2011 - 12 IS SET ASIDE AND THE SAME IS RESTORED TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE CONCERNED 8 PARTIES FOR AY 2009 - 10 AND THE 3 PARTIES FOR AY 2011 - 12 AND THEN ALLOW THE ASSESSEE TO CROSS - EXAMINE THE CONCERNED PARTIES. NEEDLESS TO SAY, THE AO WOULD PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE FRESH ASSESSMENT ORDER. THE ASSESEE IS DIRECTED TO FILE THE RELEVANT DETAILS BEFORE THE AO. ITA NO. 1779 & 1780 /MUM/201 6 10 7.6 THUS, THE 2 ND AND 3 RD GROUND OF APPEAL FOR THE AY 2009 - 10 AND 2011 - 12 ARE ALLOWED FOR STATISTICAL PURPOSES. WE MAY MENTION HERE THAT AS THE ORDER OF THE LD. CIT(A) ON THE ABOVE ISSUE HAS BEEN SET ASIDE AND THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, WE ARE NOT ADVERTING TO THE CASE LAWS CITED BY BOTH THE LD. COUNSELS. 8 . WE NOW COME TO THE 4 TH GROUND OF APPEAL. THE CHARGE OF INTEREST THOUGH MANDATORY IS CONSEQUENTIAL. WE ORDER ACCORDINGLY. THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED ONLY . THEREFORE, IT IS PREMATURE TO CONSIDER THE SAID GROUND. 9. IN THE RESULT, THE APPEAL S ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 12/07/2017. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 12/07/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI