Sri. Prakash, vs Assessee

Shri Prakash, # 224, 23rd Main, 5th Cross, Sarakki Tank Layout, JP Nagar 5th Phase, Bangalore-560078. ... Appellant PAN: AAGPP0430P

Vs.

Deputy Commissioner of Income-tax, Central Circle, Mysore. ... Respondent

Appellant by: Shri S.Venkatesan, CA. Respondent by: Shri P.Dhivahar, JCIT(DR)

Date of hearing : 04/03/2015 Date of pronouncement: 11/03/2015

Per Smt. P.MADHAVI DEVI, JM:

This is an appeal filed by the assessee against the order of

the CIT(A)-VI, Bangalore, dated 26/09/2013 confirming the

validity of the proceedings u/s 147 of the Income-tax Act, 1961

[hereinafter referred to as 'the Act' for short] and also against

the addition confirmed by the CIT(A) for the assessment year

2007-08.

ITA No.1640/Bang/2013

Shri Prakash

Page 2 of 6

2. Brief facts of the case are that the assessee, an

individual, filed his return of income on 3/2/2009 declaring

income of Rs.36,99,910/- from business. There was a search

and seizure action in the case of one Shri S.K.Srinivasa and

others on 31/1/2008 and survey u/s 133A was also conducted on

the business premises of the assessee, Shri Prakash, in

Bangalore on 31/1/2008. From the details found during the

course of survey as well as the return filed by the assessee, the

Assessing Officer (AO) noticed that the assessee, in his return of

income, had failed to declare his correct share of profit from sale

of land at Koorgalli. Hence, he sought to reopen the assessment

by issuance of notice u/s 148 on 4/3/2011. In response to the

notice u/s 148, the assessee filed copy of the return of income

filed on 3/2/2009 declaring an income of Rs.36,99,910/- from

business. Notices u/s 143(2) and u/s 142(1) were issued calling

for various details. The assessee complied with the notices and

submitted that he was only a coordinator for the sale of land and

was not the owner of the land and therefore was not in receipt of

the sale consideration. However, AO came to the conclusion that

the assessee was not just a coordinator for sale of land to Shri

S.K.Srinivasa and company, but was the owner as it was the

assessee who had purchased and sold the land. The AO relied

upon the statement of Shri S.K.Srinivasa for coming to this

conclusion. When the assessee was confronted with the

statement of Shri Srinivasa, the assessee requested for an ITA No.1640/Bang/2013 Shri Prakash

Page 3 of 6 opportunity to cross-examine Shri S.K. Srinivasa and accordingly

the assessee was informed of an opportunity to cross-examine

him on 19/12/2011. However, Shri S.K.Srinivasa did not appear

but requested for adjournment and therefore the assessee was

not given further opportunity of cross-examination. Thereafter,

the AO proceeded to complete the assessment by bringing to tax

profit from sale of land at Koorgalli.

3. Aggrieved, the assessee preferred an appeal before the

CIT(A) stating that the assessee had orally requested for the

reasons for reopening of assessment, and that the AO had

agreed to give/furnish details for reopening after completion of

cross-examination of Shri Srinivasa. It was further pleaded that

since Shri Srinivasa did not appear on the date of cross-

examination, the assessee could not cross-examine him and even

thereafter, the assessee was never furnished with the reasons for

reopening. The Chartered Accountant of the assessee, Shri

Surendra Hegde, filed an affidavit to this effect before the CIT(A).

The CIT(A) called for a remand report from the AO on the said

affidavit. The AO, in the remand report, stated that there is

nothing on record to show that the assessee had requested for

reasons for reopening of the assessment and that in spite of

opportunity given to the assessee, he failed to avail opportunity

of cross-examining Shri Srinivasa. On the basis of the said

remand report, the CIT(A) came to the conclusion that the

affidavit of the CA is only a self-serving document and cannot be ITA No.1640/Bang/2013 Shri Prakash

Page 4 of 6 accepted. He accordingly upheld the validity of the reopening of

the assessment and proceeded to consider the additions made by

the AO on both the profit on sale of land as well as unexplained

investment at Koorgalli. Accordingly, the additions were

confirmed by the CIT(A). The assessee is in second appeal

before us.

4. At the time of hearing, learned counsel for the assessee

has filed an affidavit of the assessee before us bringing to the

notice of this Tribunal that the assessee had made oral request

for reasons for reopening and also a request for cross-

examination of Shri S.K.Srinivasa and the AO had informed the

assessee that he would allow the cross-examination of Shri

Srinivasa first and thereafter provide the reasons for reopening

but before completing the assessment. It is stated that the

assessee and his CA were present on the date when Shri

S.K.Srinivasa was summoned for cross-examination but since

Shri S.K.Srinivasa did not appear at all, his cross-examination

could not take place and therefore the observation made in the

assessment order that the assessee has not availed the

opportunity of cross-examination given by the AO is not true and

correct. It is also stated that the CIT(A) has not considered the

affidavit of Shri Srinivasa filed by the assessee but has confirmed

the addition only on the basis of statement of Shri S.K.Srinivasa

which is in violation of the principles of natural justice. ITA No.1640/Bang/2013

Shri Prakash

Page 5 of 6 The copy of the affidavit was served on the learned

Departmental Representative on the earlier date of hearing and

the learned Departmental Representative was instructed to

produce the assessment records for the relevant assessment

year. The learned Departmental Representative had produced

the assessment records and on perusal of the same, we noticed

that the AO had issued summons to Shri S.K.Srinivasa to appear

for cross-examination on 19/12/2011 but Shri S.K.Srinivasa did

not appear and thereafter there was no action taken by the AO

for causing the attendance of Shri S.K.Srinivasa. We find that

the assessee was not given an opportunity to cross-examine Shri

S.K.Srinivasa and in the absence of the same, reliance on the

said statement for making addition is unsustainable. The CIT(A)

has also not considered the averments of the assessee's

authorized representative in the affidavit, that Shri S.K.Srinivasa

had not appeared for cross-examination even after seeking

adjournment for the hearing on 19/12/2011 but proceeded to

confirm the assessment order. Therefore, in our opinion, this is

against the principles of natural justice. In view of the same, we

set aside order of the AO u/s 147 and remand the issue to the

file of the AO with a direction to the AO to furnish reasons for

reopening to the assessee and if the assessee files objections

thereto, to dispose of the objections before proceeding with the

adjustment. The assessee shall also be given an opportunity to ITA No.1640/Bang/2013 Shri Prakash

Page 6 of 6 cross-examine Shri S.K.Srinivasa if the statement of Shri

S.K.Srinivasa is to be relied upon by the AO for making addition.

5. In the result, the assessee's appeal is treated as allowed

for statistical purposes.

Pronounced in the open court on 11th March, 2015.

sd/- sd/- (Abraham P George) (Smt. P.Madhavi Devi) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu

Copy to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore