Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘’SMC’’ BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH
(Applicant) (Responent) Assessee by : Shri P.B. Parmar, A.R : Revenue by Shri N.K. Goyal, Sr. DR सुनवाई क� तार�ख/Date of Hearing : 20/01/2020 घोषणा क� तार�ख /Date of Pronouncement: 30/01/2020 आदेश/O R D E R PER Ms MADHUMITA ROY, JUDICIAL MEMBER:
The instant appeal at the instance of the assessee is directed against the order dated 19.01.2018 passed by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the order dated 14.03.2016 passed by the ACIT, Central Circle-1(4), Ahmedabad under section 143 (3)of the Income Tax Act, 1961 (hereinafter referred to as “the act”) for Assessment Year 2013- 2014.
The addition under section 68 of the Act in respect of unsecured loans obtained by the assessee from four persons and the interest on such unsecured loan has been challenged before us.
The brief facts leading to the case is this that the assessee a partnership firm engaged as a developer filed its return of income for the year under consideration on 17.09.2014 declaring total income at Rs.26,92,250/-. During the course of assessment proceeding it was found that the appellant had borrowed Rs.19,30,000/- from four parties. Commission under section 131(1)(d) of the Act was issued during the course of assessment proceeding to the concerned DD/AC(Inv) of the said creditors. The details being the acknowledgement of return of those creditors, copy of balance sheet, confirmation and the bank statement including the PAN numbers of the said creditors were also given to the assessing officer by the assessee before us. However the case of the revenue is this that those creditors has outrightly denied such transaction made by them to the assessee. Moreso, they have denied that they even didn’t know the person who remitted the money to their accounts. Ultimately the revenue has come to a finding that the assessee has managed the money to transfer to their accounts and after that they had issued cheques to the assessee thus this is a clear case of accommodation entry.
At the time of hearing of the instant appeal the Learned Advocate appearing for the assessee submitted before us that in spite of repeated request for cross-examination of those creditors the same was not provided to the assessee. Hence he relied upon the judgement passed by the Hon’ble Apex Court in the matter of Andaman Timbers Industries versus CIT Excise, Kolkata- II and prayed for opportunity to cross-examine those creditors on the basis of whose statements the revenue made addition. On the other hand the Learned Departmental Representative submitted that it is a clear case of accommodation entry. Thus the Learned D.R relied upon the order passed by the authorities below.
3 5. Heard the parties, we have also perused the relevant materials available on record including the materials submitted before the authorities below in support of the case of the assessee. We have carefully considered the order passed by the authorities below wherefrom it is reflected that the assessee, time and again prayed for cross-examination of the creditors whose statements were taken into consideration by the authorities below while making addition. However such plea of the assessee was not taken into consideration in its proper perspective by granting them an opportunity to cross examine which is a serious flaw makes the order nullity as it amounts to violation principle of natural justice as we also gather from the judgement passed by the Hon’ble Apex Court as cited by the Learned A.R in the matter of Andaman Timbers Industries versus CIT Excise, Kolkata-II, reported in (2015) 62 taxmann.com 3(SC). The relevant observation made by the Apex Court in this regard is reproduced herein below: "…We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assesses was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assesses disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them…"
Thus, having heard the Ld.counsel appearing for the parties, having regard to the facts and circumstances of the case and particularly the principal laid down by the Hon’ble Apex Court as discussed hereinabove we find no 4 other alternative but to grant an opportunity to the assessee to cross-examine to the creditors by setting aside to the file of the Ld.AO. In this regard we direct the Learned Assessing Officer to arrange a commission to the relevant place of residence of those creditors/assessee for cross examination of them by the assessee within a period of two months from the date of passing of this order and to pass a reasoned order thereon after granting an opportunity of being heard to the assessee and upon taking into consideration the evidence on record and any other evidence which the assessee may choose to refer at the time of hearing of the matter. Thus the assessee’s appeal is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 30/01/2020 at Ahmedabad.