SKM STEELS LTD, MUMBAI V. ASST CIT RG 5(3), MUMBAI

ITA 6918/MUM/2011

• Counselvise Citation: 691819914 RSA 2011
• Duration Of Justice: 3 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 28-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 12-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VINITA J MENON
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Principle of natural justice; Accommodation entries

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI RAJENDRA, AM .. , , ./ I.T.A. NO. 6918/ MUM/2011 ( / ASSESSMENT YEAR : 2005-06 SKM STEELS LIMITED, GAJANAN DARSHAN, 30, C.P. TANK ROAD, MUMBAI 400 004. / VS. THE ASSTT. COMMISSIONER OF INCOME TAX RANGE 5(3), AAYAKAR BHAVAN, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020. ./ PAN : AADCS7801F ( / APPELLANT ) .. ( ! / RESPONDENT ) A PPELLANT BY SHRI SANJIV M. SHAH R E SPONDENT BY : MRS. VINITA J. MENON ' # $ % & ' / DATE OF HEARING : 28-07-2015 ()*+ % & ' / DATE OF PRONOUNCEMENT : 07-08-2015 [ 3 / O R D E R PER A.D. JAIN, J.M . : .. , THIS IS ASSESSEES APPEAL FOR A.Y. 2005-06 AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 1,05,00,00 0/- U/S 68 OF THE I.T. ACT IN RESPECT OF SHARES ISSUED TO FOUR COMPANIES. 2. THE BASIS OF THE ACTION OF THE A.O. WAS THE ALLE GED ADMISSION OF SHRI NARENDRA R. SHAH, VIDE LETTER DATED 1-1-2010, ADDRE SSED TO THE COMMISSIONER OF INCOME TAX (APPEALS) 37, MUMBAI, STATING THAT HE WAS INVOLVED IN GIVING ACCOMMODATION ENTRIES TO VARIOUS PARTIES. THE CONTE NTION ON BEHALF OF THE ITA 6918/M/11 2 ASSESSEE IS THAT NO CROSS EXAMINATION OF SHRI NAREN DRA R. SHAH WAS AFFORDED TO THE ASSESSEE AND THAT THE EVIDENCE PRODUCED BY T HE ASSESSEE HAS NOT BEEN CONSIDERED EITHER BY THE A.O., OR BY THE LD. CIT(A) . THE LD. D.R. HAS CONTENDED THAT THE ASSESSEE DID NOT ASK FOR THE CRO SS EXAMINATION OF SHRI NARENDRA R. SHAH. TO THIS, THE RESPONSE OF THE ASS ESSEE IS THAT THIS DOES NOT ACT COUNTER TO THE INTEREST OF THE ASSESSEE. SHRI N ARENDRA R. SHAH, BEING THE APPROVER/WITNESS OF THE DEPARTMENT, GRANTING AN OPP ORTUNITY TO THE ASSESSEE TO CROSS EXAMINE HIM WAS THE SINE QUA NON FOR THE A SSESSMENT ORDER TO BE PASSED. THE LD. D.R. HAS ALSO CONTENDED THAT AS IS EVIDENT FROM PARA 3.9.1. OF THE IMPUGNED ORDER, THE ASSESSEE WAS ASKED TO PRODU CE THE OTHER THREE SHAREHOLDERS FOR EXAMINATION, ALONG WITH THEIR BOOK S AND BANK PASS BOOKS, INCOME TAX RECORDS AND BALANCE SHEETS, BUT THEY WER E NOT PRODUCED BY THE ASSESSEE. THIS, ACCORDING TO THE LD. COUNSEL FOR TH E ASSESSEE, IS NOT A FACTOR ADVERSE TO THE ASSESSEE. 3. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE L IGHT OF THE MATERIAL PLACED ON RECORD, WE FIND THE GRIEVANCE OF THE ASSE SSEE TO BE JUSTIFIED. THE ASSESSMENT ORDER IS ESSENTIALLY BASED ON THE STATEM ENT OF SHRI NARENDRA R. SHAH, WHEREBY, BY VIRTUE OF LETTER DATED 1-1-2010, ADDRESSED TO THE COMMISSIONER OF INCOME TAX (APPEALS)-37, MUMBAI, HE ADMITTED THAT HE WAS INVOLVED IN GIVING ACCOMMODATION ENTRIES TO VARIOUS PARTIES. IT IS NOWHERE DENIED BY THE DEPARTMENT THAT SHRI NARENDRA R. SHAH WAS, THUS, A WITNESS OF THE DEPARTMENT. THAT BEING SO, IN ACCORDANCE WITH T HE NATURAL JUSTICE, PRINCIPLE OF AUDI ALTEREM PARTEM, THIS STATEMENT OF SHRI NARENDRA R. SHAH COULD NOT HAVE BEEN UTILIZED AGAINST THE ASSESSEE, WITHOUT PROVIDING THE ASSESSEE DUE AND ADEQUATE OPPORTUNITY TO CROSS EXAM INE SHRI NARENDRA R. SHAH. A STATEMENT RECORDED AT THE BACK OF A PARTY C ANNOT BE USED TO ITS DETRIMENT, WITHOUT CONFRONTING SUCH STATEMENT TO TH E PARTY. THE OBSERVATION OF THE LD. CIT(A) THAT THE ASSESSEE DID NOT PRODUCE THE OTHER SHAREHOLDERS FOR EXAMINATION DOES NOT MAKE THE CASE OF THE DEPARTMEN T ANY BETTER. NON- ITA 6918/M/11 3 PROVIDING OF OPPORTUNITY TO THE ASSESSEE TO CROSS E XAMINE SHRI NARENDRA R. SHAH VITIATES THE ASSESSMENT PROCESS ITSELF. 4. AS SUCH, THE MATTER IS REMITTED TO THE FILE OF T HE A.O. TO BE DECIDED AFRESH DE NOVO, IN ACCORDANCE WITH LAW, ON PROVIDIN G DUE AND FULL OPPORTUNITY OF HEARING TO THE ASSESSEE, INCLUDING THE OPPORTUNI TY TO CROSS EXAMINE SHRI NARENDRA R. SHAH. DURING THE FRESH ASSESSMENT PROCE EDINGS, THE ASSESSEE SHALL REMAIN FREE TO TAKE UP ALL PLEAS AVAILABLE TO IT UNDER THE LAW. IT SHALL ALSO BE AT LIBERTY TO PRODUCE ALL THE EVIDENCE IN ITS FA VOUR. THE ASSESSEE SHALL CO- OPERATE WITH THE A.O. DURING THE PROCEEDINGS. 5. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH .AUGUST, 2015. 3 % ()*+ ' 45 6 7 07-08-2015 ) % 8$ SD/- SD/- (RAJENDRA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER 4 ' D$ MUMBAI ; 6 DATED 07-08-2015 [ #.../ R.K. R.K. R.K. R.K. , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' E& () / THE CIT(A)-9, MUMBAI 4. ' E& / CIT- 5 MUMBAI 5. H#I 8 &JK , ' JK+ , 4 ' D$ / DR, ITAT, MUMBAI E BENCH 6. 8 L M $ / GUARD FILE. ! ( / BY ORDER, ! H& & //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , 4 ' D$ / ITAT, MUMBAI ITA 6918/M/11 4 DRAFT DICTATED ON 4 - 8 - 2015 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 5-8-2015 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH SR PS