Vinod Kumar, Guruharsahai vs Assessee

Shri Vinod Kumar, vs. Income-tax Officer, Prop. M/s. Monga Machinery Store, Ward III(1), Ferozepur. 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 assessee's appeal for assessment year 2004-05 against the

order dated 04.03.2013 passed b y learned CIT(A), Bathinda. The grounds

taken b y 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 legal basis.

3. The order passed by Ld. Commissioner of Income Tax (Appeals), Bathinda is totally illegal, uncalled 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 the following grounds:

4. That assessee denies the transactions with M/s.

2 ITA No.395(Asr)/2013 Azad Engineering Works, Bathinda & Assessing Officer has not verified it from M/s. Azad Engineering Works, Bathinda that whether M/s. Monga Machinery Store is same party 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 assessee & assessment order is to be set aside as it is also judicially supported.

5. That double taxation can not be made as in this case M/s. Azad Engineering Works, Bathinda has already settled his transactions with Hon'ble 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 judicially settled.

7. That Assessing Officer has made addition of Rs.5,85,000.00 by aggregating the total payments made in 14 transactions which is totally illegal & unjustified.

Even going by the Assessing Officer view the said payments are made against the purchases of generators & it is not investments u/s. 69. Assessing Officer totally fails to consider this fact of sale/purchase & n ot made addition of PEAK payment as payments are made in cycle of sale/purchase not as investment. It is purely a business 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."

3 ITA No.395(Asr)/2013

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 on 24.11.2003.

During the survey, incriminating documents were found and were

impounded. M/s. Azad Engineering Works, Bathinda admitted that the

transactions noted in the said documents were not recorded in the

regular books of account. These documents also contained transactions

of cash purchases to the tune of Rs.5,85,000/- made b y the assessee

from M/s. Azad Engineering Works, Bathinda. Consequentl y,

proceedings u/s. 147 of the Income-tax Act were initiated. From the

examination of the books of account of the assessee, the AO found that

the transactions noted in the impounded documents had not been

recorded in the assessee's books of account. The assessee denied having

had an y transaction with M/s. Azad Engineering Works, Bathinda.

Meanwhile, M/s. Azad Engineering Works, Bathinda moved an

application before the Settlement Commission, New Delhi for

settlement of its case. This application was admitted and the matter stood

finall y settled. It was in the light of these facts, that the AO held

that the purchases of Rs.5,85,000/- made b y the assessee from M/s.

Azad Engineering Works, Bathinda was an unexplained investment u/s 4 ITA No.395(Asr)/2013

69 of the Act. As such, the amount of Rs.5,85,000/- was added b y the AO

to the income of the assessee.

4. By way of ground No. 4 and oral submissions thereon, the ld.

Counsel for the assessee has submitted before us that it is patent on

record that the assessee had denied an y 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 Engineering Works,

Bathinda; that despite specific request having been made b y the assessee

in this regard to the AO, the AO did not provide an y opportunit y of cross-

examination of the third part y; and that the ld. CIT(A) also did not take

this vital aspect into consideration, wrongl y confirming the addition made

without providing opportunit y of cross-examining the third part y, thereb y

illegall y 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 strongl y supported the impugned order,

contending that the ld. CIT(A) has categoricall y observed that complete

facts were confronted to the assessee and the repl y submitted b y the

assessee was dul y considered b y the AO; and that, therefore, the

grievance sought to be raised b y the assessee in this regard is wholl y

misplaced.

5 ITA No.395(Asr)/2013

6. We have heard both the parties on this issue and have examined the

material placed on record with regard thereto. While confirming the

addition in question, the ld. C IT(A) has observed as 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 them is applicable to the fact of the case udder appeal. In the case of CIT, Ludhiana vs. Sanjeev Kumar Jain (2009) 38 IT Reps. 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 the back of the assessee. In the present case, complete facts were confronted to the assessee and the reply submitted was duly considered by the AO. Similar are the judgments of Hon'ble Delhi High Court in the case of CIT vs. Gulati Industrial 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) 218 CTR 367 (MP) where the order of the setting aside the assessment was held to be justified. Again, the ratio of the case of KRBL Limited vs. State of Punjab and others (2013) 44 PHT 142 (P &H) is not applicable because the facts of the case of the assessee are altogether different from the judgment relied upon by the appellant."

7. A perusal of the afore-quoted relevant portion of the impugned

order makes it evident that the ld. CIT(A) accepts the facts, in keeping

with "C IT-V, Ludhiana vs. Sanjeev Kumar Jain," (2009) 38 ITR 334

(P&H), that where opportunit y of cross examination was not allowed in

respect of the statement recorded at the back of the assessee, the

assessment was not properl y framed. However, the ld. C IT(A) has not met

this point in the present case. It remains undisputed and nothing to the 6 ITA No.395(Asr)/2013

contrary has been brought before us b y the department, that, in fact, no

opportunit y 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. C IT(A) also overlooked this fact and merel y observed that

"...........In the present case, complete facts were confronted to the

assessee and the reply submitted was duly considered by the AO ............"

It is, thus, evident that the grievance of the assessee, pleading the non-

grant of opportunit y of cross-examination of third part y, nowhere stands

addressed b y the ld. CIT(A) and the addition has been confirmed merel y

on the basis that complete facts were confronted to the assessee and his

repl y was dul y considered b y the AO.

8. Now, it is well settled, as a principle of natural justice, that nobod y

can be condemned un-heard. Where a statement is recorded at the back of

the assessee, the assessee needs must be granted an opportunit y of

examination of the deponent thereof. This, as is patent on record, has not

been done in the present case, thereb y depriving the assessee of his right

of cross-examination. It rather amounts to throwing the assessee out neck

& crop while confirming the addition made b y the AO.

9. In the above facts and circumstances, in the interest of justice, we

deem it appropriate to remit this matter to the file of AO to decide the

same in accordance with law on providing adequate and reasonable 7 ITA No.395(Asr)/2013

opportunit y of hearing to the assessee by providing ample opportunit y of

cross examination. Ordered accordingl y.

10. Since the matter is being so remitted to the file of AO and the

outcome of the remaining grounds is dependent on this issue, we are not

going into the other grounds raised b y the assessee.

11. In the result, the appeal of the assessee is partl y allowed for

statistical purposes, as indicated above.

Order pronounced in the open court on 27th January, 2015.

(B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 27th 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.