Shri Ashok Pranlal Patel, Ahmedabad V. The Income Tax Officer, Ward-8(4), Ahmedabad

ITA 1836/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1088 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 26-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: JYOTISH M SHAH
• Keywords: Principle of natural justice
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1836/AHD/2013 / ASSTT. YEAR: 2001-2002 ASHOK PRANLAL PATEL C/O. VINOD & NARENDRA 101/102, SHAILY 9, NEHRU PARK SOCIETY NR. OLD GUJARAT HIGH COURT NAVRANGPURA, AHMEDABAD. PAN : ABEPP 8336 R VS ITO, WARD-8(4) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI JYOTISH M. SHAH REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 22/06/2016 / DATE OF PRONOUNCEMENT: 25/07/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-III, AHMEDABAD DATED 30.4.2013 PASSED FOR THE ASSTT.YEAR 2001- 02. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,30,000/-. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD. IT EMERGES OUT FROM THE RECORD THAT THIS IS THE SECOND ROUND OF LITIGATION UPTO THE LEVEL OF TRIBUNAL. THE DEPART MENT HAS CARRIED OUT A SEARCH ON M/S.RAMA RAO ADIK EDUCATION SOCIETY, WHEREIN IT REVEALED TO THE DEPARTMENT THAT THE ASSESSEE HAS MADE PAYMENT OF RS .3,30,000/- AS A ITA NO.1836/AHD/2013 2 CAPITATION FEE. THE ADDITION OF RS.3.30 LAKHS WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE DISPUTE TRAVELLED UPTO THE TRIBU NAL, AND THE TRIBUNAL HAS SET ASIDE TO THE FILE OF THE AO WITH THE FOLLOWING DIRE CTIONS: 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTSET, SHRIJ.M. S HAH, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFIC ER HAS NOT PROVIDED THE MATERIAL/EVIDENCE GATHERED AGAINST THE ASSESSEE DUR ING THE SEARCH OPERATION. HE FURTHER POINTED OUT THAT IN SPITE OF REPEATED REQUESTS, THE ASSESSING OFFICER HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE PARTY, NAMELY, 'M/S. RAMA RAO ADI K EDUCATION SOCIETY WHICH IS STATED TO BE A PART OF D. Y. PATIL GROUP O F CASES. AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, WE FIND SUBSTANCE IN THE ABOVE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THUS, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO PROVIDE MATERIAL/EVIDENCE GATHERED AGAINST THE ASSESSEE DUR ING THE COURSE OF SEARCH IN THE CASE OF M/S. RAMA RAO ADIK EDUCATION SOCIETY. THE ASSESSING OFFICER IS ALSO DIRECTED TO PROVIDE AN OP PORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE AFORESAID PARTY. THE ASSESSI NG OFFICER SHOULD PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER COMPLYI NG WITH THE ABOVE DIRECTIONS.' 4. A PERUSAL OF THE ASSESSMENT ORDER WOULD REVEAL T HAT THE LD.AO DID NOT SUPPLY THE MATERIAL ALLEGED TO BE USED AGAINST THE ASSESSEE FOR MAKING THE ADDITION OF RS.3.30 LAKHS. THE ASSESSEE HAS FILED DETAILED SUBMISSION BEFORE THE AO, REQUESTING HIM TO SUPPLY COPIES OF MATERIAL , WHICH ARE USED AGAINST THE ASSESSEE. INSPITE OF REPEATED REQUESTS, THE LD .AO DID NOT SUPPLY ALL THE MATERIALS. IT ALSO EMERGES OUT FROM THE OBSERVATI ONS OF THE AO THAT SHE ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 142(1) ON 27.8.2010 AND 14.9.2010 AND DIRECTED THE ASSESSEE TO VERIFY THE RECORD FOR OBTAINING THE MATERIAL. THE AO DID NOT ALLOW REPRESENTATIVE OF THE ASSESSEE TO INSPECT RECORD AND COLLECT THE MATERIAL. TO MY MIND, IT IS UNFORTUNATE AND TO TALLY HOSTILE ATTITUDE TOWARDS THE ASSESSEE. THE DIRECTION OF THE TRIBUNAL WAS SP ECIFIC. THE BEST COURSE FOR THE AO WAS TO COLLECT ALL THE MATERIAL WHICH WERE U SED AND TO BE USED AGAINST THE ASSESSEE FOR BRINGING THE ISSUE AT HOME THAT TH E ASSESSEE HAS MADE ITA NO.1836/AHD/2013 3 PAYMENT OF RS.3.30 LAKHS TO ADIK EDUCATION SOCIETY, AND ANNEXED THAT MATERIAL WITH THE NOTICE ISSUED IN PURSUANCE OF TRI BUNALS DIRECTION. THE TRIBUNAL HAS DIRECTED THE AO TO SUPPLY COPIES OF TH E STATEMENT WHICH WERE RECORDED DURING THE COURSE OF SEARCH AT THE SOCIETY , AND THEN PERMIT THE ASSESSEE TO CROSS-EXAMINE THOSE PERSONS, IF ANYBODY HAS ALLEGED ANYTHING AGAINST THE ASSESSEE. NOW COPY OF THE STATEMENT WA S NOT SUPPLIED TO THE ASSESSEE, BUT THE ASSESSEE WAS DIRECTED TO CROSS-EX AMINE THE ACCOUNTANT. IN PARA 2.1 OF THE ASSESSMENT ORDER, THE AO HAS ALLEGE D THAT SEIZED MATERIAL WAS SUPPLIED TO THE ASSESSEE AND HE WAS DIRECTED TO CRO SS-EXAMINE THE ACCOUNTANT, SHRI SASIKANT MANDAVKAR WHO MAINTAINED ROUGH ACCOUN T OF ADIK EDUCATION SOCIETY. ON AN ANALYSIS OF THE RECORD, I AM OF THE VIEW THAT AS AGAINST THIS NOTICE, THE ASSESSEE ALREADY WROTE TO THE AO THAT S HE DID NOT SUPPLY THE MATERIAL FULLY AND SHRI SASIKANT MADAVKAR WAS NOT T HE RELEVANT PERSON WHO WAS TO BE CROSS-EXAMINED ASSESSEE. THE QUESTION IS THAT WHICH MATERIAL AND WHICH STATEMENT WAS USED AGAINST THE ASSESSEE. THO SE MATERIALS AND COPIES OF THOSE STATEMENTS SHOULD BE GIVEN TO THE ASSESSEE BY THE AO WELL IN ADVANCE, MORE PARTICULARLY, ALONG WITH COPY OF THE NOTICE IS SUED UNDER SECTION 142(1). THE ATTEMPT AT THE END OF THE AO WAS AN EYE WASH BE CAUSE THE ASSESSMENT ORDER WAS PASSED ON 24.12.2010, AND SHE WAS EXPECTI NG THE ASSESSEE TO COLLECT THE MATERIAL AND CROSS-EXAMINE ON 23.12.2010. WHER E IS THE OPPORTUNITY ? OPPORTUNITY DOES NOT MEAN THAT A FORMALITY IS BEING COMPLETED. ALONG WITH PROVIDING OPPORTUNITY, SUFFICIENT TIME SHOULD BE GI VEN TO THE ASSESSEE SO THAT HE CAN PREPARE HIS DEFENCE. EVEN IF, FOR A SAKE OF ARGUMENTS, IT IS ASSUMED THAT SOME MATERIAL WAS SUPPLIED BY THE AO ON 20.12. 2010, THEN WHETHER IT WAS A SUFFICIENT TIME FOR THE ASSESSEE TO GO THROUG H THE MATERIAL, COLLECT HIS DETAILS, WHICH CAN REBUT THE ALLEGATIONS OF THE AO IN ONE OR TWO DAYS TIME ? FROM AN OVERALL ANALYSIS OF THE RECORD, I GATHER AN INFERENCE THAT THE AO DID NOT MAKE ANY ATTEMPT TO PROVIDE DUE OPPORTUNITY OF HEARING AS CONTEMPLATED ITA NO.1836/AHD/2013 4 IN THE ORDER OF THE ITAT. SAME ADDITION HAS BEEN M ADE WITHOUT PROVIDING ANY SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESS EE. THE HONBLE SUPREME COURT IN THE CASE OF M/S.ANDAMAN TIMBER INDUSTRIES VS. COMM. OF CENTRAL EXCISE, IN CIVIL APPEAL NO.4228 OF 2006 HAS OBSERVE D THAT UNLESS THE ASSESSEE IS BEING CONFRONTED WITH THE MATERIAL OR BEING PROV IDED OPPORTUNITY TO CROSS- EXAMINE, EVIDENCE CANNOT BE USED AGAINST THE ASSESS EE. FOLLOWING OBSERVATION OF THE HONBLE SUPREME COURT IS WORTH T O NOTE: . ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES 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 AMOUNT ED 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 WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUD ICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUN ITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRAN TED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJE CTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED T HAT CROSS- EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE AP PELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURP OSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTR ACTION THE APPELLANT WANTED FROM THEM. 5. IN THE LIGHT OF THE ABOVE, IF I ANALYSIS THE REC ORD, THEN, IT IS ABUNDANTLY CLEAR THAT THE AO DID NOT ADHERE TO THE DIRECTION O F THE ITAT AND DID NOT PROVIDE OPPORTUNITY EITHER TO CROSS-EXAMINE OR CONS IDER THE ALLEGED MATERIAL ITA NO.1836/AHD/2013 5 EXHIBITING CAPITATION FEE PAID BY THE ASSESSEE AT R S.3.30 LAKHS. I ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE ADDITIONS. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 25 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 25/07/2016