KRISHAN KHADARIA,MUMBAI V. DY. CIT (CC) 4 (3), MUMBAI

MA 255/MUM/2025

AI Insights

The case involves Shri Krishan Khadaria, who filed multiple Miscellaneous Applications challenging the consolidated order of the Tribunal related to several assessment years. The primary contention was the alleged failure of the Tribunal to address certain grounds raised by the assessee, particularly concerning the validity of the assessment under section 153A of the Income Tax Act, 1961, and the principles of natural justice regarding cross-examination opportunities. The Tribunal had previously remanded the issues to the Assessing Officer, which the assessee argued did not adequately address his concerns. The Tribunal dismissed the MAs, stating that there was no apparent mistake in their earlier decision to remand the issues for further assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827236 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2025
• Other Referred Cases: CIT Vs. Eastern Commercial Enterprises, Kishanchand Chellaram Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: ASHOK BANSAL; AJAY DAGA
• Keywords: Set aside; Capital Gains; Principle of natural justice; Accommodation entries; Opportunity of cross examination; Bogus
• Section: 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SHRI ARUN KHODPIA, AM MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) (Assessment Years: 2009-10, 2014-15, 2011-12, 2012-13, 2013-14, 2015- 16 & 2010-11) Shri Krishan Khadaria, B-11,Oberoi Sky Garden, 3RS Cross Lane (Back Road), Lokhandwala Complex, Andheri (West), Mumbai – 400 053 Vs. Dy. CIT (CC) 4(3), Room No.1921, 19th Floor, Air India Building, Nariman Point, Mumbai – 400 021 PAN:AAHPK3724G (Appellant) : (Respondent) Assessee by : Shri Ashok Bansal, AR & Shri Ajay Daga, AR Respondent by : Shri Hemanshu Joshi, Sr. AR Date of Hearing : 12.12.2025 Date of Pronouncement : 09.01.2026 O R D E R Per Kavitha Rajagopal, JM: The captioned Miscellaneous Applications (“the MA” for short) have been filed by the assessee/applicant challenging the consolidated order of the Tribunal in ITA No.3195, 3200, 3197, 3198, 3199, 3201 & 3196/M/2023 dated 28.03.2025. As the facts are identical, we hereby pass a consolidated order by taking MA No.255/M/2025 relevant to Assessment Year (“AY” for short) 2009-10 as the lead case. Printed from counselvise.com MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) Shri Krishan Khadaria 2 2. The assessee/applicant has challenged the present miscellaneous application on the ground that the Tribunal has failed to adjudicate ground No.1 raised by the assessee in his appeal stating that the Learned Commissioner of Income Tax (Appeals) [“Ld. CIT(A)” for short] erred in holding the assessment to be valid without considering the fact that the material found in the course of search on the assessee did not corroborate the fact that he was indulged in providing accommodation entries by way of bogus Long Term Capital Gains (“LTCG” for short) by manipulating scrips of the companies held by him for the purpose of earning commission, in which case assessment u/s 153A of the Income Tax Act, 1961 (“the Act” for short ) could have been done. The assessee/applicant has also raised the other grounds of appeal on violation of principles of natural justice stating that cross examination was not accorded to the assessee to confront Shri RK Kedia whose statement the Assessing Officer (“the Ld. AO” for short) is said to have relied upon. 3. It is observed that the Tribunal vide a consolidated order dated 28.03.2025 had remanded all the issues back to the file of Ld. AO for providing the assessee an opportunity to cross examine the parties whose statement has been relied upon by the Ld. AO and also by furnishing the copies of the statements recorded by the Ld. AO along with sufficient time and notice to the assessee. 4. The Learned Authorized Representative (“Ld. A.R.” for short) for the assessee/applicant contended that though the assessee/applicant has raised the jurisdiction of the assessment order passed u/s 153A of the Act before the Ld. CIT(A), the same was not adjudicated by the first appellate authority. Further, the Ld. AR stated that the Tribunal Printed from counselvise.com MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) Shri Krishan Khadaria 3 at para 13 has wrongly mentioned that during the appellate proceedings the Ld. AR of the assessee restricted his arguments to grounds No.2 & 3 which was on non-granting of opportunity to cross examine. The Ld. AR also stated that in the written submission filed on 29.01.2025 and further another brief note dated 05.02.2025 evidences that the Ld. AR has argued on the other grounds as well. The Ld. AR further stated that the Tribunal has also not adjudicated on the merits of the case i.e. ground No.4 which challenges the order of the Ld. CIT(A) in restricting the commission income to 1% as against 4.75% made by the Ld. AO. The Ld. AR prayed that the order of the Tribunal be held as mistake apparent from record for non-adjudication of the above mentioned grounds. 5. The Learned Departmental Representative (“Ld. DR” for short) for the Revenue, on the other hand, controverted the said fact and contended that since the assessee/applicant has raised the specific ground on violation of principles of natural justice by not extending the assessee an opportunity to cross examine the persons whose statements the Ld. AO relied on and that the copies of the statements were also not provided to the assessee, the Tribunal has rightly remanded this issue to the file of the Ld. AO for extending the assessee one more opportunity to cross examine the concerned persons along with furnishing copies of the statements recorded by the Ld. AO. The Ld. DR further stated that in all fairness the Tribunal has remanded this issue to the Ld. AO and hence there was no necessity to decide the other grounds at this stage. The Ld. DR relied on the order of the Tribunal. 6. We have heard the rival submissions and perused the materials available on record. The assessee/applicant had filed the present MA to hold that there was mistaken apparent Printed from counselvise.com MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) Shri Krishan Khadaria 4 on record in the order of the Tribunal in not adjudicating the grounds raised by the assessee/applicant. It is further observed that the assessee/applicant has specifically raised the grounds of not providing him an opportunity of cross examination, specifically when the Ld. AO has extensively relied on the statement of such persons. Hence, the Tribunal is duty bound to look into the said ground before deciding the other legal grounds or the merits of the case. For this, we draw support from the decision of the Hon’ble High Court of Calcutta in the case of CIT Vs. Eastern Commercial Enterprises [1994] 210 ITR 103 (Calcutta)/[1995]123 CTR 217 (Calcutta) where it has reiterated that the assessee/applicant has to be confronted with all evidences or documents relied upon by the Ld. AO as per the decision of Hon’ble Supreme Court in the case of Kishanchand Chellaram Vs. CIT [1980] 125 ITR 713 (SC) and has further held that opportunity of cross examination as per the principles of natural justice is sine qua non along with supplying the details of the evidences relied on. The Hon’ble High Court proceeded to remand the issue to the Ld. AO for denovo assessment by giving the assessee sufficient opportunity to lead evidence for rebuttal of any claim against the assessee. The relevant extract of the said decision is cited herein under for ease of reference: “Learned counsel then cited a host of decisions to bring home the point that no evidence or document can be relied upon unless it is shown to the assessee. Kishanchand Chellaram v. CIT [1980] 125 ITR 713 (SC). Similarly, the requirement of cross-examination as the requirement of the rules of natural justice has been underlined by the Bombay High Court in Vasanji Ghela and Co. v. CST [1977] 40 STC 544. It is trite law that cross- examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness hostile to him. Printed from counselvise.com MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) Shri Krishan Khadaria 5 In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross- examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question.” 7. We are also conscious of the fact that various other decisions of the Hon’ble Apex Court and various Hon’ble High Courts have reiterated this view and after duly considering the same the Tribunal has consciously taken a decision based on the grounds expressly raised by the assessee and had remanded the issue to the Ld. AO for extending an opportunity to the assessee. Once all the issues have been set aside to the Ld. AO for denovo assessment there is no requirement to adjudicate on the merits. Hence, we do not find any mistake apparent in the order of the Tribunal as per section 254(2) of the Act and hence requires no interference in the order of the Tribunal. On the aforementioned observation, we hold that the MA filed by the assessee does not warrant merit and is hereby dismissed. 8. The finding given in this MA i.e. MA No.255/M/2025 will apply mutatis mutandis to other MAs i.e. MA Nos.256, 257, 258, 259, 260 & 261/M/2025 as well. Printed from counselvise.com MA Nos.255, 256, 257, 258, 259, 260 & 261/M/2025 (Arising out of ITA Nos.3195, 3200, 3197, 3198, 3199, 3201 & 3196 /Mum/2023) Shri Krishan Khadaria 6 9. In the result, all the MAs filed by the assessee/applicant are hereby dismissed. Order pronounced in the open court on 09.01.2026 Sd/- Sd/- (ARUN KHODPIA) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 09.01.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "