Shri Chhaganbhai Velabhai Desai, Ahmedabad V. The ACIT., Cent.Circle-1(1), Ahmedabad

ITA 3366/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6262 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-05-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 03-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M K PATEL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVESH SAINI, JUDICIAL MEMBER) ITA.NO.3366/AHD/2007 ASSTT.YEAR : 1998-1999 CHHAGANBHAI VELABHAI DESAI 1, GOPALNAGAR VIBHAG-1 NR.ST.XAVERIERS LOYALA SCHOOL MEMNAGAR, AHMEDABAD. VS. ACIT, CENT.CIR.1(1) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.K.PATEL REVENUE BY : SHRI C.K. MISHRA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEEES APPEAL AGAINST THE ORDER OF THE CIT(A)-IV, AHMEDABAD DATED 14-03-2007 ARISING OUT OF ORDER OF THE ASSESSING OFFICER UNDER SECTION 14 7 OF THE INCOME TAX ACT, 1961. 2. THIS APPEAL OF THE ASSESSEE, THE FOLLOWING GROUN DS ARE RAISED: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN REJECTING THE GROUND OF APPEAL NO. 1 REGARDING IMPROPER AND INADE QUATE OPPORTUNITY GRANTED TO THE APPELLANT BY THE A.O. HA VING PASSED THE ASSESSMENT ORDER IN GROSS VIOLATION OF THE PRINCIPL ES OF NATURAL JUSTICE AND EQUITY AS WELL AS WITHOUT PROPERLY CONSIDERING AND APPRECIATING THE ELABORATE SUBMISSIONS FILED BEFORE HIM DURING T HE COURSE OF APPELLATE PROCEEDINGS. ACCORDINGLY, THE IMPUGNED OR DER REQUIRES TO BE QUASHED AS VOID-AB-INITIO THE SAME HAVING BEE N PASSED IN FLAGRANT VIOLATION OF THE PRINCIPLES OF NATURAL JUS TICE AND EQUITY. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN REJECTING THE GROUND OF APPEAL NO. 2 DISPUTING THE A.O. REFUSAL T O GRANT ORAL CROSS- EXAMINATION OF SHRI VIKAS SHAH FROM WHOSE POSSESSIO N THE MATERIAL RELIED UPON IN CASE OF THE APPELLANT HAVE BEEN FOUN D AND SEIZED AND WHOSE STATEMENTS HAVE BEEN RELIED UPON BY THE A.O. FOR MAKING ADDITIONS IN CASE OF THE APPELLANT. THE A.O. BEING DUTY BOUND BY LAW TO GRANT SUCH CROSS-EXAMINATION, THE REFUSAL TO GRA NT THE SAME UNDER THE GARB THAT WRITTEN CROSS EXAMINATION HAS BEEN GR ANTED AND THAT THE STATEMENT OF THE SAID PERSON WAS FURNISHED AND THE ISSUE HAVING BEEN DISCUSSED IN THE STATEMENT OF THE APPELLANT IS WHOL LY UNJUSTIFIED AND THE IMPUGNED ASSESSMENT ORDER REQUIRES TO BE QUASHE D ON THIS GROUND ITSELF. ITA.NO.3366/AHD/2007 -2- 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.46,03,800/BEING UNDISCLOSED INCOME O N THE BASIS OF MATERIAL SEIZED AND FOUND FROM THE POSSESSION AND C ONTROL OF A THIRD PARTY NAMELY SHRI VIKAS SHAH ON THE BASIS OF IRRELE VANT OBSERVATION AND FINDINGS BASED ON DECISIONS WHICH ARE NOT APPLI CABLE TO THE APPELLANT'S CASE, WHILE IGNORING THE DECISIONS CITE D BY THE APPELLANT WHICH WERE SQUARELY APPLICABLE TO THE FAC TS OF THE APPELLANT'S CASE. IN VIEW OF THE FACTS AND ELABORAT E SUBMISSIONS FILED COUPLED WITH LEGAL POSITION IN SUPPORT THEREO F, THE IMPUGNED ADDITION OF RS.46,03,800/- REQUIRES TO BE DELETED. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT DURING THE COURSE OF SEARCH IN THE CASE OF DHARAMDE V GROUP OF BUILDERS AND VIKAS A. SHAH, CERTAIN FILES AND DOCUMENTS WERE SEI ZED FROM THE VEHICLE WITH REGISTRATION NO.GJ-1-HF-251 (STATION VAN TOYOTA MAK E). THAT AS PER THE AO, THESE DOCUMENTS ALSO CONTAINED A PAPER RELEVANT TO THE ASSESSEE. IN THIS REGARD, THE AO RECORDED THE STATEMENT OF SHRI VIKAS A. SHAH (VAS FOR SHORT) AND HAS RELIED UPON SUCH STATEMENT FOR MAKING THE A DDITION OF RS.46,03,800/-. THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSE E HAS MADE A SPECIFIC REQUEST FOR CROSS-EXAMINATION OF VAS WHICH WAS NO T PERMITTED. HE HAS STATED THAT THE REVENUE COULD NOT RELY UPON A STATE MENT RECORDED BEHIND BACK OF THE ASSESSEE WITHOUT PERMITTING THE ASSESSEE TO CROSS-EXAMINE SUCH PERSON. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE D ECISION OF HONBLE APEX COURT IN THE CASE OF KISHINCHAND CHELLARAM VS COMMI SSIONER OF INCOME-TAX , 125 ITR 713 (SC). HE THEREFORE REQUESTED THAT THE ORDER OF THE AUTHORITIES BELOW SHOULD BE SET ASIDE AND THE MATTER MAY BE RES TORED BACK TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHOULD BE A LLOWED OPPORTUNITY OF CROSS- EXAMINATION OF VAS. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS ALL OWED THE OPPORTUNITY OF WRITTEN CROSS-EXAMINATION WHICH THE ASSESSEE DID NO T AVAIL. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE SU STAINED. IN THE REJOINDER, IT IS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT WHEN A STATEMENT OF WITNESS IS RECORDED BY PUTTING THE QUESTION TO HIM BY THE AO ORALLY SUCH ITA.NO.3366/AHD/2007 -3- WITNESS CAN BE CROSS-EXAMINED ONLY BY ORALLY QUESTI ONING HIM. THEREFORE, THERE CANNOT BE ANY WRITTEN CROSS-EXAMINATION. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FACTS A S SUBMITTED BY THE LEARNED COUNSEL ARE NOT IN DISPUTE. THE AO RECORDED THE ST ATEMENT OF VAS BEHIND THE BACK OF THE ASSESSEE AND THE ASSESSEE REQUESTED FOR CROSS-EXAMINATION OF VAS. THE AO WAS OF THE OPINION THAT IT WAS NOT P OSSIBLE TO PERMIT THE ASSESSEE THE OPPORTUNITY OF ORAL CROSS-EXAMINATION, THEREFORE, THE OPPORTUNITY OF WRITTEN CROSS EXAMINATION WAS GIVEN WHICH THE AS SESSEE HAS NOT AVAILED, WHICH IS EVIDENT FROM THE PARA-3.3 OF THE ASSESSMEN T ORDER AS UNDER: 3. I ALSO REITERATE MY REQUEST FOR ORAL CROSS-EXAM INATION OF SHRI VIKAS SHAH FAILING WHICH THE RELIANCE PLACED ON HIS STATEMENT AND THE MATERIAL SEIZED FROM HIS POSSESSION AND CONTROL IS BAD IN LAW AND THE SAME HAS NO EVIDENTIARY VALUE IN THE EYES OF LA AS HELD BY VARIOUS COURTS OF LAW. IT IS SUBMITTED THAT YOUR HONOURS OFFER F OR WRITTEN CROSS- EXAMINATION OF SHRI VIKAS SHAH BY ASKING QUESTIONS TO HIM IN WRITING WHICH IN TURN WILL BE FORWARDED TO HIM BY YOUR HONO UR WILL NOT SERVE ANY EFFECTIVE PURPOSE SINCE IT WILL ONCE AGAIN TANT AMOUNT TO SELF SERVING STATEMENT. WITH DUE RESPECT, I FURTHER APPREHEND T AT THE SAME WILL BE A WELL THOUGHT OF AND GUIDED STATEMENT WITH SOMEBODY S HELP AND WILL NOT BE A SPONTANEOUS STATEMENT. HENCE, IN THE INTEREST OF JUSTICE AND EQUITY, IT WILL BE ONLY FAIR AND REASONABLE TO GRANT ORAL C ROSS-EXAMINATION OF SHRI VIKAS SHAH TO ARRIVE AT THE TRUE FACTS. IT IS SETTLED LAW THAT WHEN A STATEMENT OF A WITNES S IS RECORDED BEHIND THE BACK OF THE ASSESSEE, SUCH STATEMENTS COULD NOT BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE IS ALLOWED AN OPPORTUNITY TO CROSS-EXA MINE SUCH WITNESSES. IN OUR OPINION, THE CROSS-EXAMINATION CAN ONLY BE MADE ORA LLY AND SO-CALLED WRITTEN CROSS-EXAMINATION CANNOT SUBSTITUTE THE RIGHT OF OR AL CROSS-EXAMINATION OF THE ASSESSEE. THE UTILIZATION OF THE STATEMENT OF VAS WITHOUT ALLOWING THE ASSESSEE TO CROSS-EXAMINE HIM IS AGAINST THE NATURA L JUSTICE. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE AUTHORITIES BE LOW AND RESTORE THE MATTER BACK TO THE FILE OF THE AO. WE HOLD THAT IF THE AO WANTS TO UTILISE THE STATEMENT OF VAS AGAINST THE ASSESSEE, HE HAS TO ALLOW AN OPPORTUNITY OF ORAL ITA.NO.3366/AHD/2007 -4- CROSS-EXAMINATION OF VAS TO THE ASSESSEE. OTHERW ISE, THE AO MAY DISPOSE OF THE MATTER ON THE BASIS OF OTHER MATERIAL AVAILA BLE ON RECORD AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 6. IN THE RESULT, THE ASSESSEES APPEAL IS DEEMED T O BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 14 TH MAY, 2010. SD/- SD/- (BHAVESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 14-05-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD