KRISHNA TRADING COMPANY, MUMBAI V. ITO 23(1)(3), MUMBAI

ITA 3770/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4271 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Opportunity of cross examination
• Section: 143(3)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,MUMBAI-A,BENCH , , BEFORE S/SHJOGINDER SINGH,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ITA/3770/MUM/2010 , / ASSESSMENT YEARS: 2002-03 KRISHNA TRADING CO. 34, KEMBROS INDL. ESTATESONAPUR LANE, OFF. LBS MARG, BHANDUP(W),MUMBAI-400 078. PAN:AACFK 0150 R VS. THE INCOME TAX OFFICER WARD-23 (1), PRATYAKHSAKAR BHAVAN BANDRA (EAST),MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ARVIND KUMAR ASSESSEE BY: SHRI MANDAR VAIDYA / DATE OF HEARING: 04.04.2016 / DATE OF PRONOUNCEMENT: 04.04.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA A.M. - CHALLENGING THE ORDER DT.7.2.12 OF CIT(A)-36,THE AS SESSEE HAS FILED THE PRESENT APPEAL RAISING THREE GROUNDS OF APPEAL.ASSESSEE-FIRM,ENGAGED IN TH E BUSINESS OF TRADING IN WIRE RODS OF IRON AND STEEL,FILED ITS RETRUN OF INCOME ON 31.10.2007, DECLARING LOSS OF RS.6506/-.THE AO COMPLETED THE ASST TOM 14.12.2009 U/S. 143(3) OF TH E ACT,DETERMINING THE INCOME OF THE ASSESSEE THE RS.11.20 LAKHS. 2. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT ASSESSEE HAD SHOWN SOME COMMISSION RECEIPTS.HE DIRECTED THE ASSESSEE TO FIL E EXPLANATION IN THAT REGARD.THE ASSESSEE STATED THAT SOME OF THE PARTNERS HAD INTEREST IN S HREEJI WIRES INDUSTRIES(SWI),THAT IT WAS A FAMILY CONCERN,THAT M/S. NAVEEN TRADERES (NT), M/S. PINKY WIRE TRADERS (PWT) AND M/S. VISHAL TRADERS (VT) WANTED TO PURCHASE GOODS ON CRE DIT FROM SWI,THAT A TRIPARTITE ARRANGEMENT WAS MADE BETWEEN THE ASSESSEE THOSE PAR TIES AND SWI, THAT AS PER THE AGREEMENT THE ASSESSEE GUARANTEED PAYMENT AND SWI GUARANTEED SUPPLY OF MATERIAL, THAT SWI WAS FREE TO CHARGE HIGHER PRICE AND ASSESSEE WAS TO RECEIVE COMMISSION FROM SWI.THE AO SUMMONED THE THREE PARTIES AND RECORDED THE STATEMENT OF THE PARTNERS.AFTER CONSIDERING THE AVAILABLE MATERIAL,HE ASKED THE ASSESSEE AS TO WHY THE COMMIS SION SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES.THE ASSESSEE REQUESTED FOR CROSS EXAMNATION OF THE PARTIES.HOWEVER,THE AO REJECTED THE REQUEST AND THE EXPLANATION AND TRE ATED THE COMMISSION INCOME AS INCOME FROM OTHER SOURCES. 3 .AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FAA.BEFORE HIM, THE ASSESSEE ARGUED THAT IN ABSENCE OF CROSS E XAMINATION THE ASSESSMENT WAS VITIATED. REFERRING TO THE JUDGMENT OF GTC INDUSTRIES LTD.(65 ITD380),THE FAA HELD THAT ASSESSMENT WAS NOT VITIATED IF THE CROSS EXAMINATION WAS NOT A LLOWED.OTHER GROUNDS WERE ALSO DECIDED AGAINST THE ASSESSEE. 4 .BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)CONTEND ED THAT THERE WAS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE,THAT SPECIFIC REQUEST WAS MADE TO AFFORD A REASONABLE OPPORTUNITY OF CROSS EXAMINING THE PARTIES.DEPARTMENTAL REPRESE NTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE WITH US WE FIND THAT THE ASSESSEE HAD REQUESTED THE AO TO ALLOW HIM TO C ROSS EXAMINE THE PARTIES,THAT THE FIRST 3770/M/12-KRISHNA TRDG. 2 GOA RAISED BY THE ASSESSEE WAS ABOUT CROSS EXAMINAT ION ONLY. WE ARE OF THE OPINION,THAT IF THE STATEMENT OF A PERSON IS TO BE USED AGAINST ANY ASSESSEE,IT IS THE RIGHT OF SUCH ASSESSEE TO DEMAND CROSS-EXAMINATION. IN ABSENCE OF OPPORTUNITY OF CROSS EXAMINATION,THE ORDER CANNOT BE CALLED A REASONED AND JUSTIFIABLE ORDER.PRINCIPL ES OF NATURAL JUSTICE DEMAND THAT EVERYBODY SHOULD BE ALLOWED TO HAVE FAIR CHANCE OF REBUTTAL. IN THE CASE UNDER CONSIDERATION,THE AO HAD COLLECTED EVIDENCES BEHIND THE BACK OF THE ASSESSEE AND BEFORE CONFRONTING IT, USED SUCH MATERIAL AGAINST IT.THEREFORE,IN OUR OPINION,IT WOU LD BE IN THE INTEREST OF JUSTICE,IF THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDI CATION .AO IS DIRECTED TO HANDOVER THE COPY OF STATEMENTS RECORDED TO THE ASSESSEE FROM THE PAR TIES WHO HAD GIVEN STATEMENT AGAINST IT AND AFFORD CROSS EXAMINATION OF THOSE PARTIES.FIRST EFF ECTIVE GROUND OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. AS WE HAVE RESTORED BACK THE ISSUE TO THE FILE OF T HE AO WE ARE NOT ADJUDICATING THE OTHER ISSUES. AS A RESULT APP EAL FILED BY THE ASSESSEE IS ALLOWED IN PART. . ORDER PRONOUNC ED IN THE OPEN COURT ON 4 TH APRIL, 2016. 04 , 2016 SD/- SD /- /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :04.04.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , A , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.