NEO PHARMA PVT. LTD,MUMBAI vs. DCIT CET, CIR 5(3), MUMBAI

The assessee is engaged in real estate business. The original assessment was completed in the hands of the assessee under section 143(3) of the Act on 10.5.2012. The Department carried out search and seizure action in the hands of another builder named M/s. Ekta & Bhoomi Group on 5.10.2015. During the course of search action, certain details related to the cash transaction entered by Bhoomi group were found. It was noticed that the said cash transactions have not been accounted for in the books of 2 Neo Pharma Private Limited account of Bhoomi group. Subsequently, Sworn statement under section 131 of the Act was recorded from the director of Bhoomi group named Mr. Akshay J. Doshi on 28.12.2015 and 4.1.2016, wherein he admitted that the cash transaction executed by Bhoomi group have not been recorded in the regular books of account. In the list of cash transactions, it was noticed that the name of the assessee was available, wherein the assessee has paid a sum of Rs. 33,42,200/-. Based on this information, the Assessing Officer reopened the assessment of the assessee by issuing notice under section 148 of the Act. In the reasons for reopening, the Assessing Officer has stated that the assessee herein has paid a sum of Rs. 33,42,200/- in cash for purchase of TDR from Bhoomi group.

The assessee objected to the reopening of the assessment and also asked for a copy of material based on which the assessment was reopened. Further the assessee also asked for an opportunity to cross examine a person on whose statement the Assessing Officer is placing reliance. The Assessing Officer disposed of the objection and thereafter completed the assessment by making addition of Rs. 33,42,200/-.

Before the learned CIT(A) also the assessee requested for furnishing of material and also sought opportunity to cross examine the person on whose statement the Assessing Officer was placing reliance to make the impugned addition. The Ld CIT(A) remanded the matter to the file of the Assessing Officer. During the remand proceedings, the Assessing Officer provided the assessee an opportunity to cross examine by fixing a date and time. According to the Assessing Officer, neither the assessee nor Mr. Akshay Doshi appeared on the scheduled date and time. The learned CIT(A) has observed that the assessee has been furnished with the copies of relevant material or information received from the investigation wing and also copies of statement recorded from Mr. Akshay Doshi. Under these set of facts, the 3 Neo Pharma Private Limited learned CIT(A) took the view that the addition was rightly made and accordingly confirmed the addition made by the Assessing Officer.

The Learned AR submitted that the assessee has not been provided with a copy of material as stated by the learned CIT(A) and opportunity for cross examination was also not provided. When it was pointed that the Assessing Officer has mentioned in the remand report that the assessee also did not appear before him on the scheduled date and time given for cross examining Mr. Akshay Doshi, the learned AR submitted that the assessee did appear before the Assessing Officer and was waiting outside his chamber. However, we noticed that there was no proof to substantiate the above said claim made by learned AR. From the record we noticed that the Ld D.R has furnished information relating to the reopening to the assessee on the earlier occasion, which fact was not disputed by Ld A.R.

The Learned AR also submitted that the information of the Assessing Officer is that the impugned amount of Rs. 33,42,200/- was given by the assessee for purchase of TDR. She submitted that the assessee has not purchased any TDR during the year under consideration. She submitted that the requirement of payment of cash would arise only if any TDR has been purchased and in case of purchase, the assessee would have made payment by way of cheque also. She submitted that no cheque payment was made by the assessee to Bhoomi group in connection with alleged purchase of the TDR. Accordingly she submitted that the very foundation on which the impugned addition was made would fail in this case. The Learned AR further pleaded that the assessee may be provided with one more opportunity to cross examine a person of Bhoomi group of whose statement the Assessing Officer has placed reliance for making the impugned addition.

We heard learned DR, who submitted that it is possible that the assessee might have purchased TDR either in the earlier year or in the 4 Neo Pharma Private Limited subsequent year. Hence the name of the assessee appears in the list of cash payments. The Ld D.R fairly admitted that his submission would require verification at the end of the AO.

Having heard rival contention, we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to cross examine the official/director of Bhoomi group on whose statement the Assessing Officer had placed reliance for making the impugned addition. Further it is the contention of the assessee that it did not purchase any TDR from Bhoomi group. In the normal course, the question of making payment in cash would arise if any cheque payment is made for purchasing any asset. Since it is the contention of learned AR that the assessee has not purchased any TDR from the Bhoomi group nor did it make any cheque payment during the year under consideration, we are of the view that this aspect also requires examination at the end of the Assessing Officer. Accordingly, we are of the view that the addition made on merits also requires fresh examination at the end of the Assessing Officer. Accordingly, we set aside the order passed by the learned CIT(A) on merits and restore the same to the file of the Assessing Officer for examining it afresh, after considering the contention of the assessee with regard to the purchase of TDR and also after providing opportunity of cross examination to the assessee.

Even though the learned AR raised contention on the validity of reopening of assessment, she did not pursue the same on the reasoning that all the issues on merit is sent back to the file of the Assessing Officer with the direction stated above.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.