Shakuntala Agencies P.Ltd, Delhi V. ITO, Ward-23(1), New Delhi

ITA 2379/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4650 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Accommodation entries; Onus to prove; Documents seized; Set aside
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2378/DEL/2018 ASSESSMENT YEAR: 2009-10 IPL REALTORS PVT. LTD. PLOT NO. 20, BLOCK-D, RANGPURI, MALLIKPURKOHI VASANT KUNJ, NEW DELHI 110 070 (PAN: AABCI6441F) VS. ITO, WARD 12(4), ROOM NO. 334A, C.R. BUILDING, I.P. ESTATE, NEW DELHI 2 (APPELLANT) (RESPONDENT) ITA NO. 2379/DEL/2018 ASSESSMENT YEAR: 2009-10 SHAKUNTLA AGENCIES PVT. LTD. 10, SECTOR-10, PAPPAN KALAN, DWARKA NEW DELHI 110 075 (PAN: AAHCS3838G) VS. ITO, WARD-23(1), ROOM NO. 234A, 2 ND FLOOR, C.R. BUILDING, I.P. ESTATE, NEW DELHI 2 (APPELLANT) (RESPONDENT) ITA NO. 2381/DEL/2018 ASSESSMENT YEAR: 2009-10 SHAKUNTLA PROPERTIES PVT. LTD. PLOT NO. 454, SECTOR-19, PAPPAN KALAN, DWARKA, NEW DELHI 75 (PAN: AAHCS3836J) VS. ITO, WARD-23(1), ROOM NO. 234A, 2 ND FLOOR, C.R. BUILDING, I.P. ESTATE, NEW DELHI 2 (APPELLANT) (RESPONDENT) ORDER THESE 03 APPEALS HAVE BEEN FILED BY THE SEPARATE AS SESSEES AGAINST THE RESPECTIVE ORDERS PASSED BY LD. CIT(A)-4 & LD. CIT(A)-28, NEW DELHI ASSESSEE BY SH. P.C. YADAV, ADV. & SMT. MANJU BALA , YADAV, ADV. DEPARTMENT BY SH. S.L. ANURAGI, SR. DR. 2 RESPECTIVELY PERTAINING TO ASSESSMENT YEAR 2009-10 BY RAISING AS MANY AS 07 GROUNDS IN EACH APPEAL, BUT AT THE TIME OF HE ARING, LD. COUNSEL FOR THE ASSESSEE HAS ONLY ARGUED THE GROUND NO. 4 WHIC H IS REPRODUCED AS UNDER:- 4. THAT THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING AND THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 40 LAC WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINAT ION OF THE CONCERNED PARTIES WHOSE RECORDS AND STATEMENTS WERE RELIED UPON BY THE AO AND MADE THE BASIS FOR MAKING ADDITION. THE VERACITY OF DOCUMENTS / RECOR DS ALLEGEDLY FOUND AND SEIZED DURING A SEARCH OPERATIO N WERE NOT GOT CONFIRMED AND THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 1.1 SINCE COMMON LEGAL GROUND HAS BEEN RAISED BY TH E ASSESSEES IN ALL THE 03 APPEALS, HENCE, THE APPEALS WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE, BY DEALING WITH FACTS AND CIRCUMSTANCES OF ITA NO. 2378/DEL/2 018 (AY 2009-10) IPL REALTORS PVT. LTD. VS. ITO AND THE RESULT THERE OF WILL APPLY MUTATIS MUTANDIS TO OTHER 02 APPEALS I.E. SHAKUNTALA AGENCIES P. LTD . VS. ITO (ITA NO. 2379/DEL/2018) (AY 2009-10) AND SHAKUNTLA PROPERTIES PVT. LTD. VS. ITO (ITA NO. 2381/DEL/2018) (AY 2009-10). 2. BRIEF FACTS OF THE CASE ARE THAT AO RECEIVED INF ORMATION FROM INVESTIGATION WING OF THE DEPARTMENT AT NEW DELHI A BOUT THE RESULT OF 3 SEARCH AND SEIZURE OPERATIONS CARRIED OUT IN THE CA SE OF SH SURENDER KUMAR JAIN GROUP OF CASES IN WHICH CONCRETE EVIDENC ES WERE GATHERED WHICH PROVED THAT THE SAID GROUP WAS INVOLVED IN PR OVIDING ACCOMMODATION ENTRY TO A NUMBER OF PERSONS WHO WANT ED TO INTRODUCE THEIR UNDISCLOSED INCOME IN THEIR BOOKS OF ACCOUNTS (BENEFICIARIES). THESE ENTRIES ARE GENERALLY IN THE FORM OF SHARE CAPITAL/ PREMIUM OR LOAN ROUTED THROUGH COMPANIES FORMED BY THE GROUP FOR THIS PURP OSE. DOCUMENTS SEIZED DURING THE SEARCH REVEALED THAT THE ASSESSEE COMPANY WAS ONE OF SUCH BENEFICIARIES OF ACCOMMODATION ENTRIES. SUCH S EIZED DOCUMENTS REVEAL THE NAME OF BENEFICIARIES, AMOUNT INVOLVED, CHEQUE NOS., NAME OF ISSUING COMPANY, THE MIDDLE MAN INVOLVED AND BANK D ETAILS. THE MODUS- OPERANDI UNEARTHED AS A RESULT OF SEARCH & SEIZURE OPERATION REVEALED THAT CASH RECEIVED FROM BENEFICIARIES WAS BEING DEP OSITED IN THE ACCOUNTS OF PAPER FIRM/COMPANIES MANAGED AND CONTROLLED BY J AIN GROUP IN THE DISGUISE OF BOGUS SALES WHICH WERE ROUTED THROUGH B ANK ACCOUNTS OF VARIOUS FIRMS/COMPANIES OF THE GROUP AND ULTIMATELY AFTER SUCH LAYERINGS, FUNDS WERE PARKED IN FEW SELECTED DUMMY COMPANIES W HICH WOULD TRANSFER THE REQUIRED AMOUNT TO THE BENEFICIARY'S A CCOUNT IN THE FORM OF SHARE CAPITAL, SHARE PREMIUM OR LOAN ETC THROUGH CH EQUE OR RTGS ETC. AFTER RECEIVING AND ANALYZING THE SEIZED DOCUMENTS AND REPORT FROM THE INVESTIGATION WING, IT WAS INFERRED BY THE AO THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRY AMOUNTING TO RS 40,00,000/- IN FY 2008-09 FROM THREE OF THE COMPANIES MANAGED AND MANIPULATED BY S . K. JAIN GROUP. THE DETAILS OF THESE TRANSACTIONS AS GATHERED DURIN G SEARCH & SEIZURE 4 OPERATION HAVE BEEN TABULATED BY THE AO IN THE ASSE SSMENT ORDER WHICH REVEAL THAT THE ASSESSEE HAS RECEIVED RS 15,00,000/ - EACH FROM M/S VICTORY SOFTWARE PVT. LTD. AND HUM TURN MARKETING P VT. LTD. AND RS 10,00,000/- FROM VIP LEASING & FINANCE PVT. LTD. RE SPECTIVELY IN THE GARB OF SHARE APPLICATION MONEY. AFTER RECORDING REASONS TO BELIEVE, NOTICE U/S 148 OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSE E COMPANY AND ASSESSMENT WAS COMPLETED U/S 143(3)/147 OF THE ACT. THE AO ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE ABOVE MENT IONED COMPANIES WHICH REMAINED UN-COMPLIED WITH. AFTER DETAILED DIS CUSSION OF LEGAL AND FACTUAL ASPECTS OF THE CASE, THE AO HELD THAT THE A SSESSEE HAS FAILED TO DISCHARGE ITS ONUS U/S 68 AND PLACING RELIANCE ON A NUMBER OF CASE LAWS AND IN VIEW OF THE DETAILED INVESTIGATION CARRIED O UT BY THE INVESTIGATION WING IN THIS REGARD, THE AO TREATED RS 40 LACS AS A SSESSEE'S UNDISCLOSED INCOME U/S 68 OF THE I.T. ACT. THE AO FURTHER ADDED A SUM OF RS 80,000/- ON ACCOUNT OF COMMISSION PAID BY APPLYING THE RATE OF 2% ON THE AMOUNT OF ACCOMMODATION ENTRY OBTAINED BY THE ASSESSEE BY HOLDING THE SAID PAYMENT OF RS 80,000/- AS MADE FROM UNDISCLOSED SOU RCES AND MADE THE ASSESSMENT AT RS. 46,58,820/- U/S. 143(3)/147 OF TH E ACT VIDE ORDER DATED 26.12.2016. AGAINST THE ABOVE ADDITION, ASSES SEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 1 2.02.2018 HAS DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WIT H THE IMPUGNED ORDER DATED 12.2.2018, ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD . CIT(A) IS MERELY ON 5 THE BASIS OF STATEMENT OF SATISH GARG ALLEGED ENTRY PROVIDER. HE FURTHER SUBMITTED THAT ASSESSE AFTER SUBMITTED ALL THE DOCU MENTS HAS ASKED FOR THE CROSS EXAMINATION OF SATISH GARG, WHICH REQUEST OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE AO AND THE LD. CIT(A). HEN CE, HE SUBMITTED THAT IN A SUCH A SITUATION THE COURTS AND THE VARIO US BENCHES OF THE ITAT HAVE UNANIMOUSLY HELD THAT IT IS CLEAR CUT VIOLATI ON OF THE PRINCIPLE OF NATURAL JUSTICE AND HENCE ASSESSMENT DESERVES TO BE QUASHED AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT OF I NDIA IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CIT (2015) 127 DTR 24 1 (SC); SHOBIT GOYAL (HUF), ITA NO. 2021/DEL/2018 AND PRABHATAM VS . ACIT ITA NO. 2525 OF 2015 DATED 28.3.2015. TO SUPPORT HIS CONTEN TION, HE DRAW MY ATTENTION TOWARDS PAGE NO. 2 OF THE IMPUGNED ORDER ESPECIALLY THE GROUND NO. 5, 6, AND 7 WHICH REPRODUCED AS UNDER:- 5. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION OF THE CONCERNED PARTIES WHOSE RECORDS WERE CONFRONTED TO THE ASSESSEE AND MADE THE BASIS OF ADDITION. THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 6. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION WITHOUT PROPERLY CONSIDERING THE EXPLANATION AND EVIDENCE FURNISHED BY THE 6 ASSESSEE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION OF THE CONCERNED PARTIES WHOSE RECORDS WERE CONFRONTED TO THE ASSESSEE AND THE MADE THE BASIS OF ADDITION. THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 3.1 SINCE LD. CIT(A) HAS NOT PROPERLY ADJUDICATED THE GROUNDS NO. 5, 6, & 7, HENCE, ASSESSEE HAS RAISED THE GROUND NO . 4 RAISED BEFORE THE TRIBUNAL. IN THIS REGARD, HE DRAW MY ATTENTION TOW ARDS PAGE NO. 23-24 OF THE LD. CIT(A)S ORDER VIDE PARA NO. 7.15 AND STATE D THAT LD. CIT(A) HAS WRONGLY HELD THAT THE RIGHT OF HEARING DOES NOT INC LUDE A RIGHT TO CROSS EXAMINE AND THE RIGHT TO CROSS EXAMINE MUST DEPEND UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED AND ALSO STATED THAT IF AO REFUSES TO PRODUCE AN INFORMANT F OR CROSS EXAMINATION BY THE ASSESSEE THERE CANNOT BE ANY VIOLATION OF NAT URAL JUSTICE AND HENCE, NOT PROPERLY DECIDED THE GROUND NO. 5, 6, & 7. RAI SED BEFORE THE LD. CIT(A). IN VIEW OF ABOVE, HE SUBMITTED THAT THE ADD ITION IN DISPUTE WAS MADE AND NO STATEMENT IS CONFRONTED TO THE ASSESSEE MUCH LESS OFFERED FOR CROSS EXAMINATION WHICH ALSO LACKS OF INDEPENDE NT CORROBORATION FROM ANY INCRIMINATING MATERIAL, WHICH IS NOT SUSTAINABL E IN THE EYES OF LAW. THEREFORE, HE SUBMITTED THAT THE ISSUE ARGUED VIDE GROUND NO. 4 IS 7 SQUARELY COVERED BY THE DECISION OF THE ITAT, SMC, DELHI BENCH WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 06.11.2018 PASSED IN ITA NO. 3510/DEL/2018 (AY 2014-15) IN THE CASE OF SMT. JYOT I GUPTA VS. ITO HAS ALLOWED THE APPEAL OF THE ASSESSEE ON EXACTLY SIMI LAR FACTS AND CIRCUMSTANCES. HENCE, HE REQUESTED TO FOLLOW THE A FORESAID CASE AND ALLOW THE APPEAL OF THE ASSESSEE. 4. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW AND REITERATED THE CONTENTS MENTIONED BY THE ASSESSING OFFICER IN HIS ORDER AND RELIED UPON THE CASE LAWS CITED BY THE AO. IN S UPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF UDIT KALRA VS. ITO DATED 8.3.2019 2910- TIOL-751-HC-DEL-IT AND ITAT, SMC BENCH DECISION DATED 25.4.2019 IN TH E CASE OF POOJA AJMANI VS. ITO. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER AND FORMING A NEGATIVE INFERENCE SOLELY ON THE BASIS OF EXTRACTS OF STATEM ENT WHICH WAS NOT CONFRONTED TO THE ASSESSEE MUCH LESS OFFERED FOR CR OSS EXAMINATION AND THE CASE LAWS CITED BY THE BOTH THE PARTIES. I NOT E THAT AO MADE THE ADDITION, WHICH WAS CONFIRMED BY THE LD. CIT(A) MER ELY ON THE BASIS OF STATEMENT OF SATISH GARG ALLEGED ENTRY PROVIDER. HO WEVER, THE ASSESSEE HAS SUBMITTED ALL THE DOCUMENTS AND ASKED FOR THE C ROSS EXAMINATION OF SATISH GARG, WHICH REQUEST OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE AO AND THE LD. CIT(A). I NOTE FROM PAGE NO. 2 OF TH E IMPUGNED ORDER ESPECIALLY THE GROUND NO. 5, 6, AND 7 WHICH ARE REP RODUCED AS UNDER:- 8 5. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION OF THE CONCERNED PARTIES WHOSE RECORDS WERE CONFRONTED TO THE ASSESSEE AND MADE THE BASIS OF ADDITION. THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 6. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION WITHOUT PROPERLY CONSIDERING THE EXPLANATION AND EVIDENCE FURNISHED BY THE ASSESSEE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING T HE ADDITION WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION OF THE CONCERNED PARTIES WHOSE RECORDS WERE CONFRONTED TO THE ASSESSEE AND THE MADE THE BASIS OF ADDITION. THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 5.1 I FURTHER NOTE THAT LD. CIT(A) AT PAGE NOS. 23- 24 OF HIS IMPUGNED ORDER VIDE PARA NO. 7.15 HAS OBSERVED AS UNDER:- 7.15 IN THE PRESENT CASE, I FIND THAT THE APPELLAN T HAS FAILED TO DISCHARGE ITS BURDEN OF PROOF AND THE AO, ON THE OTHER HAND, HAS PROVED THAT THE CLAIM 9 OF THE APPELLANT WAS INCORRECT. IT HAS ALSO BEEN EMPHATICALLY CONTESTED BY THE APPELLANT BEFORE ME THAT THE ASSESSEE WAS NOT PROVIDED WITH ANY ADVERSE REPORT AND NO OPPORTUNITY WAS PROVIDED TO CROSS EXAMINE THE PERSONS /WITNESS WHOSE STATEMENTS HAVE BEEN USED AGAINST THE APPELLANT. I FIND THAT SUCH RIGHT AS HELD IN VARIO US DECISIONS, IS NOT AN ABSOLUTE RIGHT AND DEPENDS NOT ONLY THE CIRCUMSTANCES OF THE ACSE BUT ALSO ON THE STATUTE CONCERNED. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF STATE OF J&K VS. BAKSHI GULAM MOHD. AIR 1967 (SC) 122, AND IN THE CASE OF NATH INTERNATIONAL SALES VS. UOI AIR 1992 DEL. 295 THAT THE RIGHT OF HEARING DOES NOT INCLUDE A RIGHT A CROSS EXAMINE. THE RIGHT TO CROSS EXAMINE MUST DEPEND UPON THE CIRCUMSTANCES OF EACH CASE AND ALSO ON THE STATUTE CONCERNED. IN THE CASE OF T. DEVASAHAYA NADAR VS. CIT (1965) 51 ITR 20 (MAD.) IT WAS HELD THAT IT IS NOT AN UNIVERSAL RULE THAT ANY EVIDENCE UPON WHICH THE DEPARTMENT MAY RELY SHOULD HAVE BEEN SUBJECTED TO CROSS EXAMINATION. IF THE AO REFUSES TO PRODUCE AN INFORMANT FOR CROSS EXAMINATION BY 10 THE ASSESSEE THERE CANNOT BE ANY VIOLATION OF NATURAL JUSTICE. 5.2 SINCE THE LD. CIT(A) HAS NOT PROPERLY ADDRESSED THE GROUND NO. 5, 6 & 7 RAISED BEFORE HIM, HENCE, THE ASSESSEE HAS R AISED THE FOLLOWING GROUND NO. 4 BEFORE THE TRIBUNAL:- 4. THAT THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING AND THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 40 LAC WITHOUT AFFORDING OPPORTUNITY OF CROSS EXAMINATION OF THE CONCERNED PARTIES WHOSE RECORDS AND STATEMENTS WERE RELIED UPON BY THE AO AND MADE THE BASIS FOR MAKING ADDITION. THE VERACITY OF DOCUMENTS / RECORDS ALLEGEDLY FOUND AND SEIZED DURING A SEARCH OPERATION WERE NOT GOT CONFIRMED AND THE ASSESSEE WAS NOT GRANTED OPPORTUNITY TO VERIFY SUCH RECORDS BY CROSS EXAMINATION. 5.3 AFTER PERUSING THE AFORESAID FINDING OF THE LD. CIT(A) VIDE PARA NO. 7.15, IT IS CLEAR THAT LD. CIT(A) HAS NOT PROPERL Y ADJUDICATED THE AFORESAID GROUND NO. 5, 6 & 7 RAISED BEFORE HIM, W HICH IS NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, IN VIEW OF ABOVE, TH E LEGAL ISSUE ARGUED VIDE GROUND NO. 4 BEFORE THE TRIBUNAL IS SQUARELY COVERE D BY THE DECISION OF THE ITAT, SMC, DELHI BENCH WHEREIN THE TRIBUNAL VIDE IT S ORDER DATED 06.11.2018 PASSED IN ITA NO. 3510/DEL/2018 (AY 2014 -15) IN THE CASE OF SMT. JYOTI GUPTA VS. ITO WHEREIN, THE TRIBUNAL HA S ALLOWED THE APPEAL OF 11 THE ASSESSEE ON EXACTLY SIMILAR FACTS AND CIRCUMST ANCES. I NOTE THAT EXACTLY ON THE SIMILAR FACTS AND CIRCUMSTANCES THE ITAT, SMC, DELHI BENCH VIDE ITS ORDER DATED 06.11.2018 PASSED IN ITA NO. 3 510/DEL/2018 (AY 2014-15) IN THE CASE OF SMT. JYOTI GUPTA VS. ITO W HEREIN, THE SMC BENCH HAS CONSIDERED THE STATEMENT OF VIKRANT KAYAN AND HAS HELD THAT SINCE THE IMPUGNED ADDITION WAS MADE ON THE STATEMENT OF SH. VIKRANT KAYAN WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE T O CROSS EXAMINE THE SAME, WHICH IS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND AGAINST THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF ANDAMAN TIMBER VS. CIT DECIDED IN CIVIL APPEAL NO. 4228 OF 2006. FOR THE SAKE OF CONVENIENCE, I AM REPRODUCING THE RELEVANT PORTION OF THE ITAT, SMC, DELHI BENCH VIDE ITS ORDER DATED 06.11.2018 PA SSED IN ITA NO. 3510/DEL/2018 (AY 2014-15) IN THE CASE OF SMT. JYOT I GUPTA VS. ITO AS UNDER:- 13. MERELY ON THE STRENGTH OF STATEMENT OF THIRD PARTY I.E. SHRI VIKRANT KAYAN CANNOT JUSTIFY THE IMPUGNED ADDITIONS. MORESO, WHEN SPECIFIC REQUEST WAS MADE BY THE ASSESSEE FOR ALLOWING CROSS EXAMINATION WAS DENIED BY THE ASSESSING OFFICER. THE FIRST APPELLATE AUTHORITY ALSO DID NOT CONSIDER IT FIT TO ALLOW CROSS-EXAMINATION. THIS IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE RATIO LAID 12 DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER VS. CIT CIVIL APPEAL NO. 4228 OF 2006 WHEREIN IT HAS BEEN HELD AS UNDER: 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 AMOUNTED 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 ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS 13 SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT 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 PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY 14 OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE. WE, THUS, SET 15 ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 14. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, I DO NOT FIND ANY MERIT IN THE IMPUGNED ADDITIONS. THE FINDINGS OF THE CIT(A) ARE ACCORDINGLY SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF EXEMPTION U/S 10(38) OF THE ACT. 6. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE ORDER O F THE TRIBUNAL, SMC BENCH, DELHI IN THE CASE OF SMT. JYOT I GUPTA VS. ITO (SUPRA) AND IN VIEW OF THE LAW SETTLED BY THE H ONBLE SUPREME COURT OF INDIA IN THE CASE OF ANDAMAN TIMBE R VS. CIT (SUPRA), ON IDENTICAL FACTS AND CIRCUMSTANCES, THE ADDITION IN DISPUTE IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. AS REGARDS THE CASE LAWS CITED BY THE LD. DR ARE CONCE RNED, IN THE CASE OF UDIT KALRA VS. ITO, THE HONBLE DELHI HIGH COURT HAS ADJUDICATED THE CASE ON MERITS AND HAS NOT ADJUDIC ATED THE ISSUE ON CROSS EXAMINATION, THEREFORE IT WILL NOT H ELP THE DEPARTMENT. AS REGARDS ITAT, SMC, DELHI DECISION IN THE CASE OF POOJA AJMANI VS. ITO IS CONCERNED, IN THIS CASE THE ASSESSEE HAS NOT RAISED ANY LEGAL GROUND AND ARGUED ONLY ON MERIT FOR WHICH ASSESEEE HAS FAILED TO SUBSTANTIATE HIS CLAIM BEFORE THE LOWER REVENUE AUTHORITIES AS WELL AS B EFORE THE 16 TRIBUNAL, WHICH ESTABLISH THE FACTS ARE NOT IDENTI CAL TO THE PRESENT CASE, HENCE, DO NOT SUPPORT THE CASE OF THE DEPARTMENT. 7. IN THE RESULT, ALL THE 03 APPEALS FILED BY THE A SSESSEE ARE ALLOWED. THE DECISION IS PRONOUNCED ON 21/05/2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 21/05/2019 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI