MEHTA BROTHERS EXPORTS, MUMBAI V. ASST CIT CIR 16(3), MUMBAI

ITA 5753/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0987 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMEN KUMAR
• Keywords: Transfer pricing; Opportunity of being heard; Principle of natural justice; Additional evidence; Fair market value; Onus to prove
• Section: 143(3); 142(1)

Judgement Text

D B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.5753 /MUM/2014 ( / ASSESSMENT YEAR : 2003-04) MEHTA BROTHERS EXPORTS, C/O NATVARLAL VEPARI & CO., CHARTERED ACCOUNTANTS, ORICON HOUSE, 4 TH FLOOR, 12, K. DUBASH MARG, FORT, MUMBAI 400 013. / V. THE ASSTT.COMMISSIONER OF INCOME TAX -16(3), 2 ND FLOOR, MATRU MANDIR, TARDEO MARG, MUMBAI 400 007. ./ PAN : AAAFM2744B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI FARROKH V. IRANI REVENUE BY : SHRI SUMEN KUMAR, DR / DATE OF HEARING : 05-04-2017 / DATE OF PRONOUNCEMENT : 24-04-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 5753/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 17 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 27, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2003- 04, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 31 ST MARCH, 2013 PASSED BY THE LEARNED ASSESSING OFFICE R (HEREINAFTER CALLED THE AO) U/S 143(3) R.W.S. 254 OF THE INCOM E-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 5753/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) - 27, MUMBAI [CIT (A)] ERRED IN NOT ADJUDICATING GROUND NO. 2 OF THE GROUNDS OF APPEAL. 2. THE ORDER PASSED BY THE AO IS BAD IN LAW FOR THE FOLLOWING AMONGST OTHER GROUNDS. 2.1. THE AO HAS NOT GIVEN REASONABLE AND SUFFICIENT OPPORTUNITY TO THE APPELLANT TO SUBSTANTIATE ITS CLAIM. THE ONL Y OPPORTUNITY GIVEN BY THE AO IS ON 20 TH MARCH 2013 BEFORE PASSING THE ORDER. IN DOING SO THE AO HAS NOT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE. 2.2. THE AO HAS NOT CARRIED OUT THE DIRECTIONS OF T HE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (ITAT) GIVEN IN ITS ORDER DATED 12 TH AUGUST 2011. 2.3. THE AO HAS NOT CONSIDERED THE SUBMISSIONS FILE D BY THE APPELLANT DURING THE COURSE OF HEARING IN LIGHT OF THE JUDGMENT OF THE MUMBAI HIGH COURT IN THE CASE OF CIT VS. SHATRU NJAY DIAMONDS (261 ITR 258). 3. ADDITION OF RS.62,57,080/- U/S 40A(2) OF THE ACT 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT S UBMITS THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.62,57,080/- IN RESPECT OF PURCHASE OF ROUGH DIAMONDS FROM M/S. POLYDIAM N.V. U/S. 40A(2)(B) OF THE ACT. 3.2 THE APPELLANT SUBMITS THAT EXPENDITURE INCURRED FOR PURCHASES FROM M/S. POLYDIAM NV IS NOT EXCESSIVE OR UNREASONABLE HAVING REGARD TO FAIR MARKET VALUE OF GOODS FOR WHICH THE PAYMENT IS MADE. 3.3 THE AO HAS NOT BROUGHT ANY EVIDENCE TO SHOW THA T THE EXPENDITURE INCURRED ON SUCH PURCHASES IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS PURCHASED. THEREFORE APPLICATION BY THE AO OF SECTI ON 40A(2)(B) OF ITA 5753/MUM/2014 3 THE ACT FOR PURCHASES FROM M/S. POLYDIAM NV IS CONT RARY TO LAW AND FACTS ON RECORDS. 3.4 THE APPELLANT SUBMITS THAT THERE IS NO COMPARIS ON BETWEEN ROUGH DIAMONDS PURCHASED FROM M/S. PLOYDIAM NV AND FROM OTHER PARTIES, AS THESE DIAMONDS ARE NOT COMPARABLE . THUS, THE AVERAGE RATE OF RS. 5,670.67 PER CARAT FROM OTHER P ARTIES ARRIVED AT BY THE AO HAS NO BASIS, AD HOC AND ARBITRARY. 3.5 THE CIT (A) ERRED IN NOT ACCEPTING AFFIDAVIT FI LED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S. THE APPELLANT SUBMITS THAT EVEN U/S. 46A PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE APPELLATE AUTHORITY IS PERMITTE D IN CERTAIN CIRCUMSTANCES. 4. IN ANY EVENT DISALLOWANCE OF RS.62,57,080/- CONF IRMED BY THE CIT (A) IS AD HOC, ARBITRARY AND WITHOUT ANY BA SIS. 5. EACH OF THE GROUND IS WITHOUT PREJUDICE TO ONE A NOTHER. 3. THIS IS THE SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN DIA MOND AND PRECIOUS STONES. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL WAS FILED BY THE ASSESSEE ON 1ST DECEMBER, 2003 DECLARING TOTAL INCO ME OF RS. 43,63,640/- AND ASSESSMENT WAS FRAMED BY THE REVENUE ON 30 TH MARCH, 2006 U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,44 ,81,830/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL IN FIRST ROUND OF LITIGATION. THE REVENUE FILED AN APP EAL BEFORE THE TRIBUNAL AGAINST THE APPELLATE ORDER OF LEARNED CIT(A) IN FI RST ROUND OF LITIGATION AND THE TRIBUNAL WAS PLEASED TO PASS AN ORDER DATED 12 TH AUGUST 2011 IN ITA NO. 796/MUM/2007 FOR ASSESSMENT YEAR 2003-04 WHEREIN TH E ISSUE BEFORE THE TRIBUNAL AS TO THE ADDITIONS MADE U/S 40A(2)(B) OF 1961 ACT WHICH IS THE ONLY ITA 5753/MUM/2014 4 ISSUE IN DISPUTE BETWEEN RIVAL PARTIES WAS SET ASID E AND REMANDED BACK TO THE FILE OF THE AO BY THE TRIBUNAL TO BE DECIDED IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SHA TRUNJAY DIAMONDS (2003) 261 ITR 258(BOM), WHEREIN IT WAS HELD BY HONBLE BO MBAY HIGH COURT THAT IN THE CASE OF ADDITIONS U/S 40A(2)(B) OF 1961 ACT, TH E BURDEN OF PROOF IS ON THE ASSESSEE TO ESTABLISH THAT THE PAYMENT MADE BY IT T O RELATED PARTY IS NOT EXCESSIVE OR UNREASONABLE. THE HONBLE COURT HELD T HAT CERTAIN TRADE PRACTICES PREVALENT IN DIAMOND INDUSTRY ARE WITHIN THE KNOWLEDGE OF THE ASSESSEE AND THE PURPOSE BEHIND LEGISLATION ENACTIN G SECTION 40A(2)(B) OF 1961 ACT WAS TO PROVIDE FOR SHIFTING OF BURDEN ON T HE ASSESSEE IN CASES WHERE THE TRANSACTIONS ARE NOT AT ARMS LENGTH. THE RELEVA NT EXTRACT OF HONBLE BOMBAY HIGH COURT JUDGMENT AS WAS REFERRED TO BY TR IBUNAL WHILE REMANDING MATTER BACK TO THE AO IS AS UNDER: 12. SINCE ALL AUTHORITIES BELOW HAVE NOT GONE INTO THI S ASPECT OF THE MATTER, WE THINK IT NECESSARY, IN THE INTEREST OF JUSTICE, TO SET ASIDE ALL THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER, TO DECIDE AFRESH THE QUESTION OF DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT. 13. IN THIS VIEW OF THE MATTER, WE DIRECT : ( I )THE ASSESSEE TO FILE BEFORE ASSESSING OFFICER, WIT HIN SIX WEEKS FROM TODAY, AN AFFIDAVIT MAKING STATEMENT ON OATH AND ANNEXING ADD ITIONAL DOCUMENTS/STATEMENTS TO ESTABLISHED THAT THE PRICE PAID BY IT TO M/S. PARAS GEMS IS NOT EXCESSIVE OR UNREASONABLE. ( II )IF THE ASSESSING OFFICER IS NOT SATISFIED BY SUCH AFFIDAVIT AND DOCUMENTS/STATEMENTS ADDUCED BY THE ASSESSEE, THE ASSESSING OFFICER WILL CALL UPON THE ASSESSEE TO LEAD ORAL EVIDENCE OF THESE WITNESSES TO ESTABLISH ITS CASE. IT WILL BE OPEN TO THE ASSESSING OFFICER TO CROSS EXAMINE SUCH WITNESSES, IF HE DEEMS FIT. ( III )SIMILARLY, IF THE ASSESSING OFFICER WANTS TO RELY ON ANY DOCUMENTS, HE SHALL FURNISH COPIES THEREOF TO THE ASSESSEE AND PERMIT THE ASSES SEE TO CROSS EXAMINE THE AUTHOR OF THAT DOCUMENT, IF THE ASSESSEE SO DESIRES. ( IV )ON CONCLUSION OF RECORDING THE EVIDENCE, THE ASSES SING OFFICER SHALL FURNISH COPIES OF THE EVIDENCE TO THE ASSESSEE AND THEREAFTER HEAR THE MATTER ON MERITS IN ACCORDANCE ITA 5753/MUM/2014 5 WITH THE PRINCIPLES OF NATURAL JUSTICE AND PASS APP ROPRIATE ASSESSMENT ORDER ON MERITS, IN SO FAR AS IT PERTAINS TO MAKING DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE INCOME-TAX ACT. 14. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE TRIBUN AL AS WELL AS THE ORDER PASSED BY THE CIT(A) AND THE ORIGINAL ASSESSMENT ORDER AND RESTOR E THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO PASS APPROPRIATE ASSESSME NT ORDER PERTAINING TO DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT, IN ACCORDANCE WITH LAW BY FOLLOW ING THE GUIDELINES SET OUT HEREINABOVE. 15. APPEAL IS DISPOSED OF IN ABOVE TERMS, WITH NO ORDE R AS TO COSTS. THE ASSESSMENT U/S 143(3) R.W.S. 254 OF THE ACT WAS COMPLETED BY THE A.O ON 31 ST MARCH, 2013 DETERMINING THE TOTAL INCOME AT RS. 1, 39,18,530/- IN SECOND ROUND OF LITIGATION, PERSUANT TO DIRECTIONS OF THE TRIBUNAL IN ITA NO. 796/MUM/2007 VIDE ORDERS DATED 12-08-2011. THE ASSE SSEE WENT IN APPEAL BEFORE THE LD. CIT(A) IN SECOND ROUND OF LITIGATION AND RAISED SPECIFIC GROUND IN ADDITION TO OTHER GROUNDS, THAT PRINCIPLE OF NA TURAL JUSTICE HAVE NOT BEEN ADHERED TO BY THE AO WHILE FRAMING ASSESSMENT ORDER DATED 31-03-2013 PASSED U/S 143(3) R.W.S. 254 OF 1961 ACT IN SECOND ROUND OF LITIGATION AND REASONABLE AND SUFFICIENT OPPORTUNITY WAS NOT GIVEN BY THE A.O. TO THE ASSESSEE IN THE SECOND ROUND OF LITIGATION . IT IS ALSO AVERRED IN THE SAID GROUND OF APPEAL THAT SUBMISSIONS OF THE ASSESSEE F ILED BEFORE THE AO IN SET ASIDE PROCEEDINGS WERE NOT CONSIDERED BY THE AO IN THE LIGHT OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SHA TRUNJAY DIAMONDS(SUPRA) WHILE FRAMING ASSESSMENT ORDER DATED 31-03-2013 PAS SED U/S 143(3) R.W.S. 254 OF 1961 ACT . IT IS AVERRED BEFORE US BY LEARN ED SENIOR COUNSEL FOR THE ASSESSEE THAT OPPORTUNITY WAS GRANTED IN THE SET AS IDE PROCEEDINGS BY THE AO TO THE ASSESSEE AT THE FAG WHEN THE MATTER WAS GETT ING TIME BARRED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) AT GROUND NO. 2 ARE REPRODUCED HEREUNDER:- ITA 5753/MUM/2014 6 2. THE ORDER PASSED BY THE AO IS BAD IN LAW FOR TH E FOLLOWING AMONGST OTHER GROUNDS. (I) THE A.O. HAS NOT CARRIED OUT THE DIRECTIONS OF THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (ITAT) GIVEN IN ITS ORDER DATED 12TH AUGUST 2011. (II) THE A.O. HAS NOT CONSIDERED THE SUBMISSIONS FILED B Y THE APPELLANT DURING THE COURSE OF HEARING IN LIGHT OF THE JUDGMENT OF THE MUMBAI HIGH COURT IN THE CASE OF CI T VS. SHATRUNJAY DIAMOND S (261 ITR 258). (III) THE A.O. HAS NOT GIVEN REASONABLE AND SUFFICIENT OPPORTUNITY TO THE APPELLANT TO SUBSTANTIATE ITS CL AIM. THE ONLY OPPORTUNITY GIVEN BY THE A.O. IS ON 20TH MARCH 2013 BEFORE PASSING THE ORDER. IN DOING SO THE A.O HAS N OT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE. IT WAS SUBMITTED BY LEARNED SENIOR COUNSEL FOR THE ASSESSEE THAT NOTICE U/S 142(1) OF 1961 ACT WAS ISSUED BY THE A.O. ON 6 TH FEBRUARY, 2013 TO BEAT THE DEADLINE OF ASSESSMENT GETTING TIME BARRED ON 31-03 -2013. IT IS SUBMITTED THAT THE SAID NOTICE WAS RECEIVED BY ASSESSEE ON 19 -02-2013 , WHILE DATE OF HEARING FIXED AS PER THE SAID NOTICE WAS 13-02-201 3 . THE ASSESSEE FILED ITS SUBMISSIONS BEFORE THE A.O. ALONG WITH VARIOUS DOCU MENTS ON 20 TH MARCH, 2013 AND SAID REPLY IS PLACED AT PAGE NO. 60 TO 89 OF THE PAPER BOOK FILED WITH THE TRIBUNAL. THE LD. COUNSEL SUBMITTED THAT THE A .O. HAS PASSED ASSESSMENT ORDER U./S 143(3) R.W.S. 254 OF THE ACT ON 31.03.20 13 IN A HASTE IN AN HURRIED MANNER AND NO EFFECTIVE OPPORTUNITY WAS GIVEN TO TH E ASSESSEE BY THE AO WHILE FRAMING THE ASSESSMENT ORDER DATED 31-03-2013 . IT WAS ALSO BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT SPECIFIC GROUNDS WE RE RAISED BEFORE THE LD. CIT(A) THAT PROPER AND ADEQUATE OPPORTUNITY WAS NOT GRANTED BY THE AO VIDE GROUND NO. 2, WHEREIN IT WAS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE A.O. ISSUED NOTICE U/S 142(1) OF THE ACT ON 6 TH FEBRUARY, 2013 FOR THE FIRST TIME FIXING THE HEARING ON 13 TH FEBRUARY, 2013 WHICH WAS RECEIVED BY THE ITA 5753/MUM/2014 7 ASSESSEE ON 19 TH FEBRUARY, 2013 AND THEREAFTER THE ONLY OPPORTUNITY WAS GIVEN BY THE A.O. WAS ON 20 TH MARCH, 2013 WHEREBY THE ASSESSEE HAD SUBMITTED ITS REPLY WHICH HAS NOT BEEN CONSIDERED B Y THE A.O.. IT WAS ALSO SUBMITTED BY LEARNED SENIOR COUNSEL FOR THE ASSESSE E THAT THE LD. CIT(A) HAS NOT ADJUDICATED GROUND NO. 2 WHILE PASSING APPELLAT E ORDER DATED 17-02- 2014, WHEREIN THE ASSESSEE HAS RAISED SPECIFIC GROU ND OF NON-ADHERENCE OF PRINCIPLES OF NATURAL JUSTICE BY THE AO WHILE FRAMI NG ASSESSMENT IN SET ASIDE PROCEEDINGS IN SECOND ROUND OF LITIGATION .IT WAS S UBMITTED THAT THE LD. CIT(A) ADJUDICATED THE APPEAL IN SECOND ROUND OF LITIGATIO N BY DECIDING THE ISSUE ON MERITS, VIDE APPELLATE ORDERS DATED 17-02-2014. IT IS SUBMITTED BY LEARNED SENIOR COUNSEL FOR THE ASSESSEE THAT THERE IS NO AP PLICATION OF MIND BY THE AO BEFORE FRAMING ASSESSMENT ORDER U/S 143(3) R.W.S. 2 54 DATED 31-03-2013 IN SET ASIDE PROCEEDINGS IN SECOND ROUND OF LITIGATION . THE LEARNED SENIOR COUNSEL PRAYED THAT UNDER THE CIRCUMSTANCES , THE M ATTER MAY BE SET ASIDE FOR THE PURPOSES OF ADJUDICATION OF GROUND NO.2 RAI SED BY THE ASSESSEE BEFORE LEARNED CIT(A) IN SECOND ROUND OF LITIGATION. 4. THE LD DR SUBMITTED THAT IF THE LD. CIT(A) HAS N OT ADJUDICATED THE GROUND NO 2 W.R.T. NON GRANTING OF PROPER AND ADEQU ATE OPPORTUNITY, THE MATTER CAN BE SET ASIDE TO THE FILE OF THE LD. CIT( A) AS THE SAID GROUND IS NOT ADJUDICATED BY LEARNED CIT(A). 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THIS IS SECOND ROUND OF LITIGATION. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE B USINESS OF MANUFACTURING AND TRADING IN DIAMOND AND PRECIOUS STONES. THE RET URN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL WAS FILED ON 1ST DECEM BER, 2003 DECLARING TOTAL INCOME OF RS. 43,63,640/- AND ASSESSMENT WAS FRAMED BY THE REVENUE ON 30 TH MARCH, 2006 U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,44,81,830/-. THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE LD. CIT(A) ITA 5753/MUM/2014 8 WHO ALLOWED THE APPEAL IN FIRST ROUND OF LITIGATION . THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE APPELLATE OR DER OF LEARNED CIT(A) IN FIRST ROUND OF LITIGATION AND THE TRIBUNAL WAS PLEASED TO PASS AN ORDER DATED 12 TH AUGUST 2011 IN ITA NO. 796/MUM/2007 FOR ASSESSMENT YEAR 2003-04 WHEREIN THE ISSUE BEFORE THE TRIBUNAL AS TO THE ADD ITIONS MADE U/S 40A(2)(B) OF 1961 ACT WHICH IS THE ONLY ISSUE NOW IN DISPUTE BETWEEN RIVAL PARTIES WAS SET ASIDE AND REMANDED BACK TO THE FILE OF THE AO TO BE DECIDED IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT V. SHATRUNJAY DIAMONDS (2003) 261 ITR 258(BOM), WHEREIN IT WAS HE LD BY HONBLE BOMBAY HIGH COURT THAT IN THE CASE OF ADDITIONS U/S 40A(2) (B) OF 1961 ACT, THE BURDEN OF PROOF IS ON THE ASSESSEE TO ESTABLISH THAT THE P AYMENT MADE BY IT TO RELATED PARTY IS NOT EXCESSIVE OR UNREASONABLE. THE HONBLE BOMBAY HIGH COURT HELD THAT CERTAIN TRADE PRACTICES PREVALENT IN DIAMOND I NDUSTRY ARE WITHIN THE KNOWLEDGE OF THE ASSESSEE AND THE PURPOSE BEHIND L EGISLATION ENACTING SECTION 40A(2)(B) OF 1961 ACT WAS TO PROVIDE FOR SH IFTING OF BURDEN ON THE ASSESSEE IN CASES WHERE THE TRANSACTIONS ARE NOT AT ARMS LENGTH. THE RELEVANT EXTRACT OF HONBLE BOMBAY HIGH COURT JUDGMENT IN TH E CASE OF SHATRUNJAY DIAMONDS(SUPRA) AS WAS REFERRED TO BY TRIBUNAL WHIL E PASSING ORDER DATED 12- 08-2011, WHILE REMANDING MATTER BACK TO THE AO IS A S UNDER: 12. SINCE ALL AUTHORITIES BELOW HAVE NOT GONE INTO THI S ASPECT OF THE MATTER, WE THINK IT NECESSARY, IN THE INTEREST OF JUSTICE, TO SET ASIDE ALL THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER, TO DECIDE AFRESH THE QUESTION OF DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT. 13. IN THIS VIEW OF THE MATTER, WE DIRECT : ( I )THE ASSESSEE TO FILE BEFORE ASSESSING OFFICER, WIT HIN SIX WEEKS FROM TODAY, AN AFFIDAVIT MAKING STATEMENT ON OATH AND ANNEXING ADD ITIONAL DOCUMENTS/STATEMENTS TO ESTABLISHED THAT THE PRICE PAID BY IT TO M/S. PARAS GEMS IS NOT EXCESSIVE OR UNREASONABLE. ( II )IF THE ASSESSING OFFICER IS NOT SATISFIED BY SUCH AFFIDAVIT AND DOCUMENTS/STATEMENTS ADDUCED BY THE ASSESSEE, THE ASSESSING OFFICER WILL CALL UPON THE ASSESSEE TO LEAD ORAL ITA 5753/MUM/2014 9 EVIDENCE OF THESE WITNESSES TO ESTABLISH ITS CASE. IT WILL BE OPEN TO THE ASSESSING OFFICER TO CROSS EXAMINE SUCH WITNESSES, IF HE DEEMS FIT. ( III )SIMILARLY, IF THE ASSESSING OFFICER WANTS TO RELY ON ANY DOCUMENTS, HE SHALL FURNISH COPIES THEREOF TO THE ASSESSEE AND PERMIT THE ASSES SEE TO CROSS EXAMINE THE AUTHOR OF THAT DOCUMENT, IF THE ASSESSEE SO DESIRES. ( IV )ON CONCLUSION OF RECORDING THE EVIDENCE, THE ASSES SING OFFICER SHALL FURNISH COPIES OF THE EVIDENCE TO THE ASSESSEE AND THEREAFTER HEAR THE MATTER ON MERITS IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND PASS APP ROPRIATE ASSESSMENT ORDER ON MERITS, IN SO FAR AS IT PERTAINS TO MAKING DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE INCOME-TAX ACT. 14. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE TRIBUN AL AS WELL AS THE ORDER PASSED BY THE CIT(A) AND THE ORIGINAL ASSESSMENT ORDER AND RESTOR E THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO PASS APPROPRIATE ASSESSME NT ORDER PERTAINING TO DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT, IN ACCORDANCE WITH LAW BY FOLLOW ING THE GUIDELINES SET OUT HEREINABOVE. 15. APPEAL IS DISPOSED OF IN ABOVE TERMS, WITH NO ORDE R AS TO COSTS. THE ASSESSMENT U/S 143(3) R.W.S. 254 OF THE ACT WAS COMPLETED BY THE A.O ON 31 ST MARCH, 2013 DETERMINING THE TOTAL INCOME AT RS. 1, 39,18,530/- IN SECOND ROUND OF LITIGATION, PERSUANT TO DIRECTIONS OF THE TRIBUNAL IN ITA NO. 796/MUM/2007 VIDE ORDERS DATED 12-08-2011. THE ASSE SSEE WENT IN APPEAL BEFORE THE LD. CIT(A) IN SECOND ROUND OF LITIGATION AND HAD RAISED SPECIFIC GROUND IN ADDITION TO OTHER GROUNDS BEING GROUND NO 2, THAT PRINCIPLE OF NATURAL JUSTICE HAVE NOT BEEN ADHERED TO BY THE AO WHILE FRAMING ASSESSMENT ORDER DATED 31-03-2013 PASSED U/S 143(3) R.W.S. 254 OF 1961 ACT IN SECOND ROUND OF LITIGATION AND REASONABLE AND SUFFICIENT O PPORTUNITY WAS NOT GIVEN BY THE A.O. TO THE ASSESSEE IN THE SECOND ROUND OF LIT IGATION . IT IS ALSO AVERRED IN THE SAID GROUND OF APPEAL THAT SUBMISSIONS OF THE A SSESSEE FILED BEFORE THE AO IN SET ASIDE PROCEEDINGS WERE NOT CONSIDERED BY THE AO IN THE LIGHT OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT V. SHATRUNJAY DIAMONDS(SUPRA) WHILE FRAMING ASSESSMENT ORDER DATE D 31-03-2013 PASSED U/S 143(3) R.W.S. 254 OF 1961 ACT . IT IS AVERRED BEFORE US BY LEARNED SENIOR ITA 5753/MUM/2014 10 COUNSEL FOR THE ASSESSEE THAT OPPORTUNITY WAS GRANT ED TO THE ASSESSEE AT THE FAG END BY THE AO IN SET ASIDE PROCEEDINGS WHEN THE MATTER WAS GETTING TIME BARRED. THE GROUNDS OF APPEAL RAISED BEFORE THE LD . CIT(A) AT GROUND NO. 2 READS AS UNDER:- 2. THE ORDER PASSED BY THE AO IS BAD IN LAW FOR TH E FOLLOWING AMONGST OTHER GROUNDS. (IV) THE A.O. HAS NOT CARRIED OUT THE DIRECTIONS OF THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (ITAT) GIVEN IN ITS ORDER DATED 12TH AUGUST 2011. (V) THE A.O. HAS NOT CONSIDERED THE SUBMISSIONS FILED B Y THE APPELLANT DURING THE COURSE OF HEARING IN LIGHT OF THE JUDGMENT OF THE MUMBAI HIGH COURT IN THE CASE OF CI T VS. SHATRUNJAY DIAMOND S (261 ITR 258). (VI) THE A.O. HAS NOT GIVEN REASONABLE AND SUFFICIENT OPPORTUNITY TO THE APPELLANT TO SUBSTANTIATE ITS CL AIM. THE ONLY OPPORTUNITY GIVEN BY THE A.O. IS ON 20TH MARCH 2013 BEFORE PASSING THE ORDER. IN DOING SO THE A.O HAS N OT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE. IT WAS SUBMITTED BY LEARNED SENIOR COUNSEL FOR THE ASSESSEE THAT NOTICE U/S 142(1) OF 1961 ACT WAS ISSUED BY THE A.O. ON 6 TH FEBRUARY, 2013 TO BEAT THE DEADLINE OF ASSESSMENT GETTING TIME BARRED ON 31-03 -2013. IT IS SUBMITTED THAT THE SAID NOTICE WAS RECEIVED BY ASSESSEE ON 19 -02-2013 , WHILE DATE OF HEARING FIXED AS PER THE SAID NOTICE WAS 13-02-201 3 . THE ASSESSEE FILED ITS SUBMISSIONS BEFORE THE A.O. ALONG WITH VARIOUS DOCU MENTS ON 20 TH MARCH, 2013 AND SAID REPLY IS PLACED AT PAGE NO. 60 TO 89 OF THE PAPER BOOK FILED WITH THE TRIBUNAL. THE LD. SENIOR COUNSEL SUBMITTED THA T THE A.O. HAS PASSED ASSESSMENT ORDER U./S 143(3) R.W.S. 254 OF THE ACT ON 31.03.2013 IN A HASTE IN AN HURRIED MANNER AND NO EFFECTIVE OPPORTUNITY W AS GIVEN TO THE ASSESSEE BY THE AO WHILE FRAMING THE ASSESSMENT ORDER DATED 31-03-2013. IT WAS ALSO ITA 5753/MUM/2014 11 BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT SPECIFIC GROUNDS WERE RAISED BEFORE THE LD. CIT(A) THAT PROPER AND ADEQUATE OPPORTUNITY WAS NOT GRANTED BY THE AO VIDE GROUND NO. 2, WHEREIN IT WAS ALSO SUBMITTE D BEFORE THE LD. CIT(A) THAT THE A.O. ISSUED NOTICE U/S 142(1) OF THE ACT O N 6 TH FEBRUARY, 2013 FOR THE FIRST TIME FIXING THE HEARING ON 13 TH FEBRUARY, 2013 WHICH WAS RECEIVED BY THE ASSESSEE ON 19 TH FEBRUARY, 2013 AND THEREAFTER THE ONLY OPPORTUNITY WAS GIVEN BY THE A.O. WAS ON 20 TH MARCH, 2013 WHEREBY THE ASSESSEE HAD SUBMITTED ITS REPLY ON 20-03-2013 WHICH HAS NOT BEE N CONSIDERED BY THE A.O.. IT WAS ALSO SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE LD. CIT(A) HAS NOT ADJUDICATED GROUND NO. 2 WHILE PASSI NG APPELLATE ORDER DATED 17-02-2014, WHEREIN THE ASSESSEE HAS RAISED SPECIFI C GROUND OF NON- ADHERENCE OF PRINCIPLES OF NATURAL JUSTICE BY THE A O WHILE FRAMING ASSESSMENT IN SET ASIDE PROCEEDINGS IN SECOND ROUND OF LITIGAT ION .IT WAS SUBMITTED THAT THE LD. CIT(A) ADJUDICATED THE APPEAL IN SECOND ROU ND OF LITIGATION BY DECIDING THE ISSUE ON MERITS, VIDE APPELLATE ORDERS DATED 17 -02-2014. IT IS SUBMITTED BY LEARNED SENIOR COUNSEL FOR THE ASSESSEE THAT THE RE IS NO APPLICATION OF MIND BY THE AO BEFORE FRAMING ASSESSMENT ORDER DATED 31- 03-2013 PASSED U/S 143(3) R.W.S. 254 OF 1961 ACT IN SET ASIDE PROCEEDI NGS IN SECOND ROUND OF LITIGATION. THE LEARNED SENIOR COUNSEL PRAYED THAT UNDER THE CIRCUMSTANCES , THE MATTER MAY BE SET ASIDE FOR THE PURPOSES OF ADJ UDICATION OF GROUND NO.2 RAISED BY THE ASSESSEE BEFORE LEARNED CIT(A) IN SEC OND ROUND OF LITIGATION. WE HAVE OBSERVED THAT THERE IS ONLY ONE ISSUE IN DI SPUTE BETWEEN RIVAL PARTIES WHICH IS W.R.T. PURCHASE OF ROUGH DIAMONDS BY THE A SSESSEE FROM M/S POLYDIAM NV BELGIUM TO THE TUNE OF RS. 8,51,41,549/ - , WHO IS AN ASSOCIATED ENTERPRISE OF THE ASSESSEE REGISTERED IN BELGIUM AS THE SAID ENTITY IS OWNED BY BROTHER OF THE PARTNER OF THE ASSESSEE. THE ADDITIO NS WERE MADE U/S 40A(2)(B) OF 1961 ACT BY HOLDING THAT PURCHASES WERE MADE AT A PRICE WHICH IS EXCESSIVE AND UNREASONABLE AND HENCE SECTION 40A(2) (B) OF 1961 ACT IS ATTRACTED. THE MATTER WENT TO THE TRIBUNAL IN FIRST ROUND OF LITIGATION AND THE ITA 5753/MUM/2014 12 TRIBUNAL WAS PLEASED TO PASS AN ORDER DATED 12 TH AUGUST 2011 IN ITA NO. 796/MUM/2007 FOR ASSESSMENT YEAR 2003-04 WHEREIN TH E ISSUE BEFORE THE TRIBUNAL AS TO THE ADDITIONS MADE U/S 40A(2)(B) OF 1961 ACT WHICH IS THE ONLY ISSUE IN DISPUTE BETWEEN RIVAL PARTIES WAS SET ASID E AND REMANDED BACK TO THE FILE OF THE AO TO BE DECIDED IN THE LIGHT OF DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SHATRUNJAY DIAMONDS (20 03)261 ITR 258(BOM), WHEREIN IT WAS HELD BY HONBLE BOMBAY HIGH COURT TH AT IN THE CASE OF ADDITIONS U/S 40A(2)(B) OF 1961 ACT, THE BURDEN OF PROOF IS ON THE ASSESSEE TO ESTABLISH THAT THE PAYMENT MADE BY IT TO RELATED PA RTY IS NOT EXCESSIVE OR UNREASONABLE. THE HONBLE BOMBAY HIGH COURT HELD TH AT CERTAIN TRADE PRACTICES PREVALENT IN DIAMOND INDUSTRY ARE WITHIN THE KNOWLEDGE OF THE ASSESSEE AND THE PURPOSE BEHIND LEGISLATION ENACTIN G SECTION 40A(2)(B) OF 1961 ACT WAS TO PROVIDE FOR SHIFTING OF BURDEN ON T HE ASSESSEE IN CASES WHERE THE TRANSACTIONS ARE NOT AT ARMS LENGTH. THUS, THE ASSESSEE WAS FULLY AWARE OF THE ISSUE WHICH WAS REMANDED BY TRIBUNAL WAY BACK I N THE YEAR 2011 VIDE ORDERS DATED 12-08-2011 WHEREIN ISSUE WAS REMANDED BY TRIBUNAL TO THE FILE OF THE AO FOR DE-NOVO DETERMINATION BY THE AO IN SE COND ROUND OF LITIGATION IN THE LIGHT OF HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF SHATRUNJAY DIAMONDS(SUPRA) . THE ASSESSEE WAS FULLY AWARE THAT BURDEN OF PROOF IS ON THE ASSESSEE AND AN AFFIDAVIT IS ALSO TO BE FILED A S PER DIRECTION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMOND S(SUPRA), BUT THE ASSESSEE STILL CHOSE NOT TO FILE AN AFFIDAVIT BEFOR E THE AO IN SET ASIDE PROCEEDINGS. THE SAID AFFIDAVIT WAS FILED BY THE AS SESSEE BEFORE LEARNED CIT(A) IN SECOND ROUND OF LITIGATION. THE RELEVANT EXTRACT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMOND S (SUPRA) RELIED UPON BY THE TRIBUNAL WHILE PASSING ORDER DATED 12-08-201 1 IN FIRST ROUND OF LITIGATION IS REPRODUCED HEREUNDER: 12. SINCE ALL AUTHORITIES BELOW HAVE NOT GONE INTO THI S ASPECT OF THE MATTER, WE THINK IT NECESSARY, IN THE INTEREST OF JUSTICE, TO SET ASIDE ALL THE ORDERS PASSED BY THE AUTHORITIES BELOW ITA 5753/MUM/2014 13 AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER, TO DECIDE AFRESH THE QUESTION OF DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT. 13. IN THIS VIEW OF THE MATTER, WE DIRECT : ( I )THE ASSESSEE TO FILE BEFORE ASSESSING OFFICER, WIT HIN SIX WEEKS FROM TODAY, AN AFFIDAVIT MAKING STATEMENT ON OATH AND ANNEXING ADD ITIONAL DOCUMENTS/STATEMENTS TO ESTABLISHED THAT THE PRICE PAID BY IT TO M/S. PARAS GEMS IS NOT EXCESSIVE OR UNREASONABLE. ( II )IF THE ASSESSING OFFICER IS NOT SATISFIED BY SUCH AFFIDAVIT AND DOCUMENTS/STATEMENTS ADDUCED BY THE ASSESSEE, THE ASSESSING OFFICER WILL CALL UPON THE ASSESSEE TO LEAD ORAL EVIDENCE OF THESE WITNESSES TO ESTABLISH ITS CASE. IT WILL BE OPEN TO THE ASSESSING OFFICER TO CROSS EXAMINE SUCH WITNESSES, IF HE DEEMS FIT. ( III )SIMILARLY, IF THE ASSESSING OFFICER WANTS TO RELY ON ANY DOCUMENTS, HE SHALL FURNISH COPIES THEREOF TO THE ASSESSEE AND PERMIT THE ASSES SEE TO CROSS EXAMINE THE AUTHOR OF THAT DOCUMENT, IF THE ASSESSEE SO DESIRES. ( IV )ON CONCLUSION OF RECORDING THE EVIDENCE, THE ASSES SING OFFICER SHALL FURNISH COPIES OF THE EVIDENCE TO THE ASSESSEE AND THEREAFTER HEAR THE MATTER ON MERITS IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND PASS APP ROPRIATE ASSESSMENT ORDER ON MERITS, IN SO FAR AS IT PERTAINS TO MAKING DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE INCOME-TAX ACT. 14. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE TRIBUN AL AS WELL AS THE ORDER PASSED BY THE CIT(A) AND THE ORIGINAL ASSESSMENT ORDER AND RESTOR E THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO PASS APPROPRIATE ASSESSME NT ORDER PERTAINING TO DISALLOWANCE UNDER SECTION 40A(2)( B ) OF THE I.T. ACT, IN ACCORDANCE WITH LAW BY FOLLOW ING THE GUIDELINES SET OUT HEREINABOVE. 15. APPEAL IS DISPOSED OF IN ABOVE TERMS, WITH NO ORDE R AS TO COSTS. THE A.O. ISSUED NOTICE U/S 142(1) ON 6 TH FEBRUARY, 2013 WHEREBY THE DATE OF HEARING WAS FIXED FOR 13.2.2013 . THE SAID NOTICE DATED 06-02-2013 CONTAINED DETAILS OF INFORMATION SOUGHT BY THE AO B UT INCIDENTALLY THE ASSESSEE DID NOT PLACED THE SAID NOTICE DATED 06-02 -2013 IN THE PAPER BOOK FILED WITH THE TRIBUNAL (REF PAGE 9/PB). THE ASSESS EE HAS CLAIMED THAT THE SAID NOTICE DATED 06-02-2013 WAS RECEIVED BY IT ON 19-02 -2013. WE HAVE OBSERVED FROM PAGE 9 OF PAPER BOOK FILED WITH THE TRIBUNAL T HAT THE ASSESSEE GAVE LETTER ITA 5753/MUM/2014 14 TO THE AO DATED 22-02-2013 , WHEREIN IT IS AVERRED THAT THE SAID NOTICE DATED 06-02-2013 WAS RECEIVED BY THE ASSESSEE ON 19-02-20 13 , WHEREIN DATE OF HEARING WAS FIXED BY THE AO FOR HEARING ON 13-02-2 013 . IN THE SAID LETTER DATED 22-02-2013 ADDRESSED BY THE ASSESSEE TO THE A O , IT IS ALSO MENTIONED THAT THERE IS A CHANGE OF ADDRESS OF THE ASSESSEE W HEREIN THE NEW ADDRESS OF THE ASSESSEE IS AT MEHTA BROTHERS EXPORTS C/O MR RA JESH MEHTA , MATRU ASHISH, A/1, 14 TH FLOOR, 39, NAPEAN SEA ROAD , OPP.RUSSIAN EMBASSY, MUMBAI -400036. THUS, IT APPEARS THAT MAIN CAUSE OF DELAY IN SERVING OF NOTICE IS THE CHANGE IN ADDRESS OF THE ASSESSEE. TH E ASSESSEE HAS SOUGHT ANOTHER DATE FROM THE AO VIDE COMMUNICATION DATED 2 2-02-2013 INSTEAD OF SUBMITTING INFORMATION AS REQUIRED BY THE AO VIDE N OTICE DATED 06-02-2013. THE AO GRANTED ANOTHER DATE TO THE ASSESSEE ON REQU EST MADE BY THE ASSESSEE FIXING THE DATE OF HEARING ON 01-03-2013(REF PAGE 1 0/PB). ON 1 ST MARCH 2013, WHEN THE ASSESSEE WENT TO THE OFFICE OF THE AO, IT IS CLAIMED BY THE ASSESSEEE THAT THE AO WAS NOT PRESENT IN THE OFFICE(REF PAGE 10/PB) AS IS EMERGING FROM THE RECORDS PLACED BEFORE US. THE ASSESSEE SHOULD H AVE FILED ITS REPLY IN TAPAL BUT INSTEAD THE ASSESSEE AGAIN SOUGHT TIME FROM THE AO VIDE TELEPHONIC CALL MADE TO THE AO REQUESTING FOR TIME IN FILING REPLIE S , WHEREIN THE AO GRANTED OPPORTUNITY TO THE ASSESSEE TO FURNISH DETAILS ON 2 0-03-2013. THE ASSESSEE SUBMITTED DETAILS ON 20-03-2013 BEFORE THE AO BUT A GAIN CHOSE NOT TO FILE AN AFFIDAVIT BEFORE THE AO AS WAS REQUIRED TO BE FIL ED AS PER DIRECTIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMONDS(SUPRA). THE ASSESSEE FILED THE SAID AFFIDAVIT AS WAS MANDATED B Y HONBLE BOMBAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMONDS(SUPRA) BEF ORE LEARNED CIT(A). THE ASSESSEE IS WELL REPRESENTED AND ASSISTED BY SENIOR TAX EXPERTS OF THE COUNTRY AND THE ASSESSEE WAS FULLY AWARE OF THE MATTER GETT ING TIME BARRED AS PER PROVISIONS OF THE ACT ON 31-03-2013. TO CLAIM THAT THE AO ADVISED THE ASSESSEE THAT MATTER IS NOT GETTING TIME BARRED ON 31-03-2013(REF PAGE 11/PB) AND THE ASSESSEE WAS NOT AWARE OF THE TIME BARRING OF THE PROCEEDINGS ON 31- 03-2013 , WHO IS WELL REPRESENTED AND ASSISTED BY S ENIOR TAX EXPERTS OF THE ITA 5753/MUM/2014 15 COUNTRY IS TOO FAR-FETCHED. IT IS ALSO NOT KNOWN WH EN THE ASSESSEE CHANGED ITS ADDRESS AS STATED IN ITS LETTER DATED 22-2-2013 TO THE AO AND WHETHER THE REVENUE WAS INTIMATED BY THE ASSESSEE OF THE NEW AD DRESS OR NOT. THESE ISSUES AND CLAIMS REQUIRES FINDING OF FACTS BY THE AUTHORITIES BELOW WHICH REQUIRES INVESTIGATION OF FACTS WHICH CAN BE CONCL USIVELY HELD AFTER CONSIDERING RECORDS AND EVIDENCES. THERE WAS ONLY O NE ISSUE IN DISPUTE BETWEEN RIVAL PARTIES AND THE ASSESSEE WAS FULLY AW ARE OF THIS ISSUE SINCE ASSESSMENT WAS ORIGINALLY FRAMED IN THE YEAR 2006 A ND IN ANY CASE TRIBUNAL VIDE ITS ORDERS PASSED ON 12-08-2011 ITSELF HAD D IRECTED THE ASSESSMENT TO BE FRAMED DE-NOVO BY THE AO IN LIGHT OF HONBLE BOM BAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMOND(SUPRA). AS COULD BE SEEN FROM THE ABOVE DISCUSSIONS AND OUR PRIMA-FACIE FINDINGS , THE ASSE SSEE HAD ALSO ADOPTED A VERY CASUAL AND LAX APPROACH IN SET ASIDE PROCEEDIN GS BEFORE THE AO IN SECOND ROUND OF LITIGATION AND HAS NOT PERSUED THE MATTER WITH THE SERIOUSNESS IT DESERVED , FOR WHICH THE ASSESSEE IS TO BE BLAMED EQUALLY. THESE ARE OUR PRIMA-FACIE FINDING ON THE GRANT OF P ROPER AND ADEQUATE OPPORTUNITY BY THE AO TO THE ASSESSEE IN SET ASIDE PROCEEDINGS BASED ON DOCUMENTS PRODUCED BEFORE US . IN ANY CASE , THE LD . CIT(A) HAS NOT ADJUDICATED GROUND NO. 2 W.R.T. TO GRANT OF PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE BY THE AO IN SET ASIDE PROCEEDINGS AND TO ARRIVE AT CONCLUSIVE FINDING AS TO THE GRANT OF PROPER AND ADEQUATE OPPO RTUNITY OF BEING HEARD BY THE AO NEED INVESTIGATION INTO RECORDS AND EVIDENCE S . IN THE FITNESS OF THE MATTER AND FAIRNESS TO BOTH THE PARTIES, WE AFTER G IVING A CAREFUL AND ANXIOUS THOUGHT TO THE ENTIRE MATERIAL BEFORE US ARE OF THE CONSIDERED VIEW THAT THIS ISSUE NEEDS TO BE RESTORED BACK TO THE FILE OF THE LEARNED CIT(A) AS THE LEARNED CIT(A) HAS NOT ADJUDICATED THIS GROUND OF APPEAL NO 2 RAISED BY THE ASSESSEE BEFORE LEARNED CIT(A) IN SECOND ROUND OF LITIGATION , WHICH GROUND OF APPEAL IS WITH RESPECT TO NON GRANT OF PROPER AND ADEQUATE OP PORTUNITY OF BEING HEARD BY THE AO TO THE ASSESSEE , AND THE LEARNED CIT(A) IS DIRECTED TO ADJUDICATE THIS ISSUE AFTER PROPER VERIFICATION, ENQUIRY AND E XAMINATION INCLUDING OF THE ITA 5753/MUM/2014 16 RECORDS BEFORE THE AO AND EVIDENCES. THE POWERS OF LEARNED CIT(A) ARE CO- TERMINUS WITH THE POWERS OF LEARNED AO. THE LEARNED CIT(A) IS DIRECTED TO ADJUDICATE THE ISSUE IN ACCORDANCE WITH OUR DIRECTI ONS AS PER LAW AFTER GIVING ADEQUATE AND PROPER OPPORTUNITY TO THE ASSESSEE AND THE ASSESSEE IS DIRECTED TO PRODUCE COGENT EVIDENCES IN SUPPORT OF ITS DEFEN SE, WHICH EVIDENCES SHALL BE ADMITTED BY LEARNED CIT(A) IN THE INTEREST OF JU STICE. WE WOULD LIKE TO CLARIFY THAT THE LD CIT(A) WILL ADJUDICATE ON THIS GROUND OF NON GRANTING OF ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY LEARNED AO IN SECOND ROUND OF LITIGATION UN-INFLUENCED BY OUR PRIMA FACI E FINDINGS . THE LEARNED CIT(A) SHALL FOLLOW RULE 46A OF INCOME-TAX RUES, 19 62 WHILE ADJUDICATING THE ISSUE. THE LEARNED CIT(A) AFTER ADJUDICATING GROUN D NO. 2 RAISED BEFORE IT IN SECOND ROUND OF LITIGATION REGARDING NON GRANT OF A DEQUATE OPPORTUNITY ETC. SHALL THEN BASED ON HIS FINDINGS W.R.T GROUND NO. 2 SHALL THEN DECIDE ON OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS, IF NECESS ITY SO ARISES AS REQUIRED BY LAW. SINCE, THE ASSESSEE HAS PRAYED FOR RELIEF AGAI NST NON-ADJUDICATION OF GROUND NO. 2 BY LEARNED CIT(A) AS TO NON PROVISION OF EFFECTIVE OPPORTUNITY BY THE AO IN SET ASIDE PROCEEDINGS, WE HAVE ALLOWED TH IS GROUND OF THE ASSESSEE FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH APRIL, 2017. # $% &' 24-04-2017 ( ) SD/- SD/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 24-04-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 5753/MUM/2014 17 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI B BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI