Sh. Vinod Kumar, Guruharsahai V. The Income-tax Officer, Ferozepur

ITA 395/ASR/2013

• Counselvise Citation: 39520914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 12-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B M SINGHAL
• Keywords: Unexplained investment; Principle of natural justice; Opportunity of cross examination; Question of law
• Section: 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO.395 (ASR)/2013 ASSESSMENT YEAR: 2004-05 PAN: ACNPM 3375K SHRI VINOD KUMAR, VS. INCOME-TAX OFFICER, PROP. M/S. MONGA MACHINERY STORE, WARD III(1), FE ROZEPUR. GURUHARSAHAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.M. SINGHAL, ADVOCATE RESPONDENT BY : SMT. RATINDER KAUR, D.R. DATE OF HEARING : 20.01.2015 DATE OF PRONOUNCEMENT : 27.01.2015 ORDER PER A.D. JAIN, J.M. THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2004 -05 AGAINST THE ORDER DATED 04.03.2013 PASSED BY LEARNED CIT(A), BA THINDA. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS FOLLOWS : 1. THAT THE ORDERS PASSED BY THE ASSESSING OFFICER VIDE ORDERS DATED 13.12.2011 ARE ILLEGAL, UNCALLED FOR AND AGAINST THE LAW. 2. THAT THE ASSESSING OFFICER HAS MADE ADDITIONS MERELY ON CONJECTURES AND SURMISES WITHOUT ANY LEGA L BASIS. 3. THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS), BATHINDA IS TOTALLY ILLEGAL, UNCALLE D FOR AND AGAINST THE LAW AND ADDITIONS ARE SUSTAINED ON THE BASIS OF CONJECTURES & SURMISES WITHOUT ANY LEGAL BASIS. THAT WRONG ADDITION OF RS.5,85,000.00 IS MADE ON TH E FOLLOWING GROUNDS: 4. THAT ASSESSEE DENIES THE TRANSACTIONS WITH M/S. ITA NO.395(ASR)/2013 2 AZAD ENGINEERING WORKS, BATHINDA & ASSESSING OFFICE R HAS NOT VERIFIED IT FROM M/S. AZAD ENGINEERING WORKS, B ATHINDA THAT WHETHER M/S. MONGA MACHINERY STORE IS SAME PAR TY OR NOT. THUS, CROSS EXAMINATION OF THIRD PARTY DESPITE THE REQUEST MADE BY THE APPELLANT IS NOT MADE. THIS IS CLEAR DENIAL OF NATURAL JUSTICE TO THE ASSE SSEE & ASSESSMENT ORDER IS TO BE SET ASIDE AS IT IS ALSO J UDICIALLY SUPPORTED. 5. THAT DOUBLE TAXATION CAN NOT BE MADE AS IN THIS CASE M/S. AZAD ENGINEERING WORKS, BATHINDA HAS ALREADY S ETTLED HIS TRANSACTIONS WITH HONBLE SETTLEMENT COMMISSION , NEW DELHI & HAD PAID THE TAXES ON THAT TRANSACTIONS. NOW THE SAME TRANSACTIONS CANNOT BE TAXED IN THE HANDS OF THE APPELLANT. DOUBLE TAXATION CAN NOT BE MADE. IT IS SETTLED ISSUE. THUS NO ADDITION CAN BE MADE IN THIS CASE. 6. THAT THE ASSESSING OFFICER HAS NOT INVESTIGATED PROPERLY THE CASE OF OTHER PARTIES AS MENTIONED IN THE DOCUMENTS OF M/S. AZAD ENGINEERING WORKS, BATHINDA. WHETHER THE OTHER PARTIES HAS BEEN TAXED OR NOT IS IMPORTANT FOR THE APPELLANT CASE, AS ARTICLE 14 OF CONSTITUTION OF INDIA CLEARLY SAYS THAT RIGHT OF EQUALITY IN THE CASE OF TAXATION IS ALSO TO BE MAINTAINED AND IT IS ALSO JU DICIALLY SETTLED. 7. THAT ASSESSING OFFICER HAS MADE ADDITION OF RS.5,85,000.00 BY AGGREGATING THE TOTAL PAYMENTS MA DE IN 14 TRANSACTIONS WHICH IS TOTALLY ILLEGAL & UNJUSTIFIED . EVEN GOING BY THE ASSESSING OFFICER VIEW THE SAID PAYMENTS ARE MADE AGAINST THE PURCHASES OF GENERATO RS & IT IS NOT INVESTMENTS U/S. 69. ASSESSING OFFICER TOTAL LY FAILS TO CONSIDER THIS FACT OF SALE/PURCHASE & NOT MADE ADDI TION OF PEAK PAYMENT AS PAYMENTS ARE MADE IN CYCLE OF SALE/PURCHASE NOT AS INVESTMENT. IT IS PURELY A BUS INESS TRANSACTION, IF ANY. IT IS ALSO JUDICIALLY SETTLED. THUS, IN NO CIRCUMSTANCES, ADDITION OF RS.5,85,000 .00 CAN BE MADE. 8. THE ASSESSEE CRAVES LEAVE TO ARGUE ON ANY OTHER QUESTION OF LAW OR FACTS AT THE TIME OF HEARING OF THIS APPEAL. ITA NO.395(ASR)/2013 3 2. GROUNDS NOS. 1, 2, 3 & 8 ARE GENERAL. 3. GROUNDS NOS. 4 TO 7 PERTAIN TO ONE AND THE SAME ISSUE, I.E., ADDITION OF RS.5,85,000/-. THE FACTS, AS PER RECORD , ARE THAT A SURVEY U/S. 133A OF THE INCOME-TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF M/S. AZAD ENGINEERING WORKS, BATHINDA O N 24.11.2003. DURING THE SURVEY, INCRIMINATING DOCUMENTS WERE FOU ND AND WERE IMPOUNDED. M/S. AZAD ENGINEERING WORKS, BATHINDA AD MITTED THAT THE TRANSACTIONS NOTED IN THE SAID DOCUMENTS WERE NOT R ECORDED IN THE REGULAR BOOKS OF ACCOUNT. THESE DOCUMENTS ALSO CONT AINED TRANSACTIONS OF CASH PURCHASES TO THE TUNE OF RS.5,85,000/- MADE BY THE ASSESSEE FROM M/S. AZAD ENGINEERING WORKS, BATHINDA. CONSEQU ENTLY, PROCEEDINGS U/S. 147 OF THE INCOME-TAX ACT WERE INI TIATED. FROM THE EXAMINATION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE , THE AO FOUND THAT THE TRANSACTIONS NOTED IN THE IMPOUNDED DOCUMENTS H AD NOT BEEN RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT. THE AS SESSEE DENIED HAVING HAD ANY TRANSACTION WITH M/S. AZAD ENGINEERING WORK S, BATHINDA. MEANWHILE, M/S. AZAD ENGINEERING WORKS, BATHINDA MO VED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION, NEW D ELHI FOR SETTLEMENT OF ITS CASE. THIS APPLICATION WAS ADMITT ED AND THE MATTER STOOD FINALLY SETTLED. IT WAS IN THE LIGHT OF THESE FACTS , THAT THE AO HELD THAT THE PURCHASES OF RS.5,85,000/- MADE BY THE ASS ESSEE FROM M/S. AZAD ENGINEERING WORKS, BATHINDA WAS AN UNEXPLAINED INVESTMENT U/S ITA NO.395(ASR)/2013 4 69 OF THE ACT. AS SUCH, THE AMOUNT OF RS.5,85,000/ - WAS ADDED BY THE AO TO THE INCOME OF THE ASSESSEE. 4. BY WAY OF GROUND NO. 4 AND ORAL SUBMISSIONS THER EON, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US TH AT IT IS PATENT ON RECORD THAT THE ASSESSEE HAD DENIED ANY TRANSACTION WITH M/S. AZAD ENGINEERING WORKS, BATHINDA; THAT, HOWEVER, THE AO DID NOT DEEM IT APPROPRIATE TO VERIFY THIS FACT FROM M/S. AZAD ENGI NEERING WORKS, BATHINDA; THAT DESPITE SPECIFIC REQUEST HAVING BEEN MADE BY THE ASSESSEE IN THIS REGARD TO THE AO, THE AO DID NOT PROVIDE AN Y OPPORTUNITY OF CROSS- EXAMINATION OF THE THIRD PARTY; AND THAT THE LD. CI T(A) ALSO DID NOT TAKE THIS VITAL ASPECT INTO CONSIDERATION, WRONGLY CONFI RMING THE ADDITION MADE WITHOUT PROVIDING OPPORTUNITY OF CROSS-EXAMINING TH E THIRD PARTY, THEREBY ILLEGALLY DEPRIVING THE ASSESSEE OF ITS RIGHT UNDER THE SETTLED PRINCIPLE OF NATURAL JUSTICE, AUDI ALTERAM PARTEM , VITIATING THE IMPUGNED ORDER. 5. PER CONTRA, THE LD. DR HAS STRONGLY SUPPORTED TH E IMPUGNED ORDER, CONTENDING THAT THE LD. CIT(A) HAS CATEGORICALLY OB SERVED THAT COMPLETE FACTS WERE CONFRONTED TO THE ASSESSEE AND THE REPLY SUBMITTED BY THE ASSESSEE WAS DULY CONSIDERED BY THE AO; AND THAT, T HEREFORE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE IN TH IS REGARD IS WHOLLY MISPLACED. ITA NO.395(ASR)/2013 5 6. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND HAVE EXAMINED THE MATERIAL PLACED ON RECORD WITH REGARD THERETO. WHIL E CONFIRMING THE ADDITION IN QUESTION, THE LD. CIT(A) HAS OBSERVED A S FOLLOWS: WITH REGARD TO THE ADDITION OF RS.5,85,000/-, THE LD. A/R OF THE APPELLANT HAS RELIED UP A NUMBER OF JUDGMENTS. THE SAID JUDGMENTS HAVE DULY BEEN CONSIDERED BUT NONE OF THE M IS APPLICABLE TO THE FACT OF THE CASE UDDER APPEAL. IN THE CASE OF CIT, LUDHIANA VS. SANJEEV KUMAR JAIN (2009) 38 IT R EPS. 334 (P&H), IT HAS BEEN HELD THAT THE ASSESSMENT WAS NOT PROPERLY FRAMED BECAUSE OPPORTUNITY OF CROSS-EXAMINATION WAS NOT ALLOWED IN RESPECT OF THE STATEMENTS RECORDED AT TH E BACK OF THE ASSESSEE. IN THE PRESENT CASE, COMPLETE FACTS W ERE CONFRONTED TO THE ASSESSEE AND THE REPLY SUBMITTED WAS DULY CONSIDERED BY THE AO. SIMILAR ARE THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GULATI INDU STRIAL FABRICATION (P) LIMITED REPORTED AT (2008) 217 CTR 494 (DEL), CIT VS. SMC SHARE BROKERS LIMITED (2007) 210 CTR 353 (DELHI), SMT. REENA JAIN & ORS. VS. CIT (2007) 210 CTR 491 (ALL) AND PRAKASH CHAND NATHA VS. CIT (2007) 21 8 CTR 367 (MP) WHERE THE ORDER OF THE SETTING ASIDE THE A SSESSMENT WAS HELD TO BE JUSTIFIED. AGAIN, THE RATIO OF THE C ASE OF KRBL LIMITED VS. STATE OF PUNJAB AND OTHERS (2013) 44 PH T 142 (P&H) IS NOT APPLICABLE BECAUSE THE FACTS OF THE CA SE OF THE ASSESSEE ARE ALTOGETHER DIFFERENT FROM THE JUDGMENT RELIED UPON BY THE APPELLANT. 7. A PERUSAL OF THE AFORE-QUOTED RELEVANT PORTION O F THE IMPUGNED ORDER MAKES IT EVIDENT THAT THE LD. CIT(A) ACCEPTS THE FACTS, IN KEEPING WITH CIT-V, LUDHIANA VS. SANJEEV KUMAR JAIN, (200 9) 38 ITR 334 (P&H), THAT WHERE OPPORTUNITY OF CROSS EXAMINATION WAS NOT ALLOWED IN RESPECT OF THE STATEMENT RECORDED AT THE BACK OF TH E ASSESSEE, THE ASSESSMENT WAS NOT PROPERLY FRAMED. HOWEVER, THE LD . CIT(A) HAS NOT MET THIS POINT IN THE PRESENT CASE. IT REMAINS UNDISPUT ED AND NOTHING TO THE ITA NO.395(ASR)/2013 6 CONTRARY HAS BEEN BROUGHT BEFORE US BY THE DEPARTME NT, THAT, IN FACT, NO OPPORTUNITY OF CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE, EVEN DESPITE THE ASSESSEE HAVING MADE A SPECIFIC REQUEST IN THIS REGARD TO THE AO. THE LD. CIT(A) ALSO OVERLOOKED THIS FACT AND ME RELY OBSERVED THAT ...........IN THE PRESENT CASE, COMPLETE FACTS WER E CONFRONTED TO THE ASSESSEE AND THE REPLY SUBMITTED WAS DULY CONSIDERE D BY THE AO ............ IT IS, THUS, EVIDENT THAT THE GRIEVANCE OF THE ASSE SSEE, PLEADING THE NON- GRANT OF OPPORTUNITY OF CROSS-EXAMINATION OF THIRD PARTY, NOWHERE STANDS ADDRESSED BY THE LD. CIT(A) AND THE ADDITION HAS BE EN CONFIRMED MERELY ON THE BASIS THAT COMPLETE FACTS WERE CONFRONTED TO THE ASSESSEE AND HIS REPLY WAS DULY CONSIDERED BY THE AO. 8. NOW, IT IS WELL SETTLED, AS A PRINCIPLE OF NATUR AL JUSTICE, THAT NOBODY CAN BE CONDEMNED UN-HEARD. WHERE A STATEMENT IS REC ORDED AT THE BACK OF THE ASSESSEE, THE ASSESSEE NEEDS MUST BE GRANTED AN OPPORTUNITY OF EXAMINATION OF THE DEPONENT THEREOF. THIS, AS IS PA TENT ON RECORD, HAS NOT BEEN DONE IN THE PRESENT CASE, THEREBY DEPRIVING TH E ASSESSEE OF HIS RIGHT OF CROSS-EXAMINATION. IT RATHER AMOUNTS TO THROWING THE ASSESSEE OUT NECK & CROP WHILE CONFIRMING THE ADDITION MADE BY THE AO . 9. IN THE ABOVE FACTS AND CIRCUMSTANCES, IN THE INT EREST OF JUSTICE, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FIL E OF AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW ON PROVIDING ADEQUATE A ND REASONABLE ITA NO.395(ASR)/2013 7 OPPORTUNITY OF HEARING TO THE ASSESSEE BY PROVIDING AMPLE OPPORTUNITY OF CROSS EXAMINATION. ORDERED ACCORDINGLY. 10. SINCE THE MATTER IS BEING SO REMITTED TO THE FI LE OF AO AND THE OUTCOME OF THE REMAINING GROUNDS IS DEPENDENT ON TH IS ISSUE, WE ARE NOT GOING INTO THE OTHER GROUNDS RAISED BY THE ASSESSEE . 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JANU ARY, 2015. (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JANUARY, 2015 *AKS/- COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. ASSESSING OFFICER 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.