THE DY. CIT., CIRCLE-4(2),, BARODA vs. SHRI TOUQUIRE AZAD SIDDIQUE,, BARODA

आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This revenue’s appeal for A.Y. 2007-08, arises from order of the CIT(A)-4, Vadodara dated 25-01-2017, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”.

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 2 DCIT vs. Shri Touquire Azad Siddique

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 3 DCIT vs. Shri Touquire Azad Siddique

Corporation and M/s Ravikiran Ceramics Pvt Ltd. Near Railway Station, Village Kanjari, Nadiad, page No. 93 to 100 of Annexure Bl-l from Dhavalgiri Appt. 21st Floor, Phapnus Wadi, Gowalia Tank Road, Bh. Gamdevi Police Station, Mumbai, page No. 26 to 28, 60, 61, 81, 103 & 104 of Annexure A-6, page No. 202 of Annexure A-8, page No. 81 of Annexure A-17 from Ravi Ram Sales Corporation, Opp. Dena Bank, 164 Lohar Chawl, Gondji Khimji Building, Princess Street Mumbai and page No. 7 of As per the discussion hereinabove the objection of A.R against considering the material found and seized along with statement recorded u/s 132(4), of the IT Act is not acceptable. It transpires from the correspondence between Shri Rameshbhai and Ashokbhai of Ravi Kiran Group that they have been paying unaccounted commission ranging from 10% to 6% since 1996 to Sud Chemie India Pvt. Ltd. and it is given to Shri Laljibhai and Siddhique as evident from statement recorded u/s 132(4) during search proceedings u/s 132 as referred herein above. Further in light of Kerala High Court's decision referred to in Para 7 above in case of M/s Hotel Meria, it is held that evidence gathered during search are sufficient to conclude that assessee received unaccounted commission on job work of Sud Chemie India Pvt Ltd from Ravi Kiran Group of companies. As regard quantification of unaccounted commission, it is requested that both assessee and Shri Laljibhai have received it at the rate of six to ten percentage and hence 3% commission should be quantified in assesses case. On detailed analysis of the correspondence between Ashokbhai, and Rameshbhai it transpires that five percentage of total Job work of Rs. 14,66,12,986/-requires to be considered as fair and justifiable. Therefore Rs.73,30,650/- being five percentage of total Job work done by Ravi Kiran group of Rs. 14,66,12,986/- is held as unaccounted commission received by assessee and it is added to the total income of the assessee. Penalty proceedings u/s. 271(l,(c) of the Act are initiated for concealing of income." From the above para of the Assessing Officer, it clearly transpires that he has not taken any cognizance to the written submissions made by the assessee. He has also completely overlooked the reference to the petition filed before the Hon'ble Commissioner, Central - II, Ahmedabad by the said company from which it is crystal clear [as can be seen from internal para 12, 13 & 14 of the said letter] that the Directors (including Managing Director) of the Company have admitted that no commission as alleged is actually paid to the appellant. The declaration being relevant is reproduced as under from page no. 23 to 25 of the Assessment Order in the written submissions made by the Authorized Representative in para above. 4.4. I also agree with the Ld. Authorized Representative that this issue was adjudicated by my predecessors in favour of the appellant in earlier three assessment years. He has mentioned Appeal Nos. as CAB/VI-468/2011-12 (A.Y.2004-05), CAB/A/VI-194/2013-14 (A.Y.2005-06) and CAB/4-196/2014-15 (A.Y.2006-07). In last Appeal order for A.Y.2006-07, Ld. CIT(A) in his order dated 19.05.2015 has held as under:- ' "7.3 I have considered the facts and circumstances of the case, observations of the Assessing Officer, submissions of the assessee, the material available on the record and the relevant judicial pronouncements on the subject. The issue is covered in favour of the assessee in its own case in A. Y. 2005-06 by the order of CIT(A) in CAB/A/VI-194/2013- 14, whereby, CIT(A) has held as under on the issue- "6.3 I have considered the facts and the circumstances of the case, the observations of the Assessing Officer, submissions of the assessee, material available on record and the relevant judicial pronouncements on the subject. It is pertinent to note here that whole allegation of commission payment to the assessee is based on certain typed, unsigned loose papers found at the premises of Ravikiran group. There is no evidence that these documents were ever received by the assessee. There is no acknowledgement of receipt of the commission by the assessee. It is also noted that Shri Rameshbhai has never stated anything about paying commission to the assessee in his statement u/s

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 4 DCIT vs. Shri Touquire Azad Siddique

132(4). He has only stated that the assessee is the main Production In-charge ofSud-Chemie India Pvt. Ltd. It is also noted that the assessee was never allowed to cross examine Shri Rameshbhai or Shri Ashokbhai, to establish veracity of alleged commission payments to him, despite his request to the Assessing Officer. Even the copy of the statement of Shri Rameshbhai was not provided to the assessee. There is no evidence on record to corroborate the theory of commission payment by Ravikiran group to the assessee. No efforts have been made either by the Assessing Officer or the ADIT(lnv.) to cross-verify the seized documents based on which allegation of receipt of commission by the assessee was made by ADIT(lnv.)/ Assessing Officer. I have also perused the Assessment Order for A.Y. 2006-07 in the case of M/s Ravi Ceramics Pvt. Ltd. (a Ravikiran group entity), which is a quasi-judicial order and a public document. The Assessing Officer has, at pages 23, 24 and 25 of the said order, referred to a petition u/s 273A of the Act by Shri Ramesh Shah, on behalf of M/s Ravi Ceramics Pvt. Ltd., in which, he has stated that no amount is paid to the assessee as commission and the amount stated to have been paid to the assessee was in-fact, retained by him and Shri Nitin Shah. 6.4 It is further observed that on the same set of papers and same set of facts, similar additions were made in the case of the assessee in A.Y. 2004-05 and the same were deleted by my predecessor. CIT(A)-VI, Baroda, in the case of the assessee himself in A.Y. 2004-05 in CAB/VI-468/2011-12 has held as under on the issue- "It may be mentioned that Shri Rameshbhai has not mentioned anything about the alleged commission paid to the appellant nor the loose papers were cross verified with Shri Ashokbhai who has allegedly written these letters. Based on the information so received by the AO, he issued notice u/s. 148 of the appellant. During the course of re-assessment proceedings the appellant requested AO to provide the copies of loose papers and their English translation on the basis of which addition was proposed to be made, copies of statement recorded on oath of Shri Rameshbhai and opportunity to cross examine the third party who has allegedly paid commisssion to the appellant. The AO only provided the copies of loose papers which were written in Gujarati. The Ao did not provide any English Translation, copies of the statement and no opportunity of cross examination was afforded to the appellant. As far as loose papers are concerned. They were typed letters written by one Shri Ashokbhai addressed to Shri Rameshbhai, however, none of them was signed by Ashokbhai. No efforts have been made either by Investigtion Wing or by the AO to cross verify the statement of Shri Rameshbhai. Notings in the loose papers were not corroborated with reference to entries in the books of account. The statement recorded on oath of Shri Rameshbhai does not reveal anything whatsoever. He was asked question No. 9 as to whether he knows Shri Siddhique, in response to which he replied in affirmative. Similarity vide question No. 30 he was asked as to who is Mr. Laljibhai, in response to which Shri Rameshbhai replied that Shri La/jibhai is probably Vice President ofSud-chemie India Pvt. Ltd. Except these two questions nothing has been reported on the isisue of unaccounted commission paid by RKGC to the appellant. Lastly, though the AO has relied on the statement of Shri Rameshbhai he has not mde nay effort to cross verify even the basic information mentioned therein. He has not conducted any further investigation whatsoever as suggested by the Investigation Wing. He has not offered any opportunity to the appellant for cross examination. In view of the above facts, entire re-assessment proceedings have been vitiated beyond correction. The AO is duty bound to bring every material to the notice of the appellant on which he is relying and has to offer an opportunity of cross

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 5 DCIT vs. Shri Touquire Azad Siddique

examination of the persons on whose statement he is relying on. The assessment made by the AO without observing the principles of natural justices is bad in law therefore, deserves to be quashed/annulled." 6.5 Considering the above discussion and considering that the facts of the present case are similar to the facts in A.Y. 2004-05, following the order of CIT(A) in the case of the assessee in CAB/VI-468/2011-12 (A.Y. 2004-05), it is held that the reassessment proceedings have been vitiated as the principles of natural justice have not been followed by the Assessing Officer. Hence, the impugned order u/s 143(3) r.w.s. 147 of the Act is quashed. The assessee succeeds on these grounds of appeal." 7.4 Considering the above discussion and considering that the facts of the present case are similar to the facts in A.Y. 2005-06, following the order of CIT(A) in the case of the assessee in CAB/A/VI-194/2013-14 (A.Y. 2005-06), it is held that the reassessment proceedings have been vitiated as the principles of natural justice have not been followed by the Assessing Officer. Hence, the impugned order u/s 143(3) r.w.s. 147 of the Act is quashed. The assessee succeeds on these grounds of appeal." Facts of the present case are identical. There are similar kind of additions made year after year and deleted/assessment order quashed by the CslT(Appeals). I too do not find any reason to differ from three of my predecessors who have allowed appeal of the assessee and respectfully following the same, allow the main Ground of the appellant.”

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 6 DCIT vs. Shri Touquire Azad Siddique

money themselves and wrongly declared to other director that such amount was paid to the assessee and they have concealed the real facts from the directors. The assessee has denied of receiving of any such commission merely based on internal correspondences between Shri Ramesh Shah and Shri Ashok Shah of Ravikiran Group. In the light of the above facts and circumstances, we find that the assessing officer had never allowed the assessee to cross examine Shri Rameshbhai or Shri Ashokbhai to establish the veracity of commission payment in spite of request made to the assessing officer. It is undisputed facts that the assessing officer has not provided copies of statements of the aforesaid persons to the assessee. The assessing officer has not carried out any investigation to substantiate that the aforesaid commission was actually paid to the assessee. In the light of the aforesaid facts and detailed findings as elaborated in the decision of the ld. CIT(A), we do not find any merit in this ground of appeal of the revenue, therefore, the appeal of the revenue is dismissed.

I.T.A No. 1187/Ahd/2017 A.Y. 2007-08 Page No 7 DCIT vs. Shri Touquire Azad Siddique

into consideration that the assessee has not furnished relevant supporting evidences to substantiate his claim of aforesaid expenditure. Even during the course of appellate proceedings before us, the assessee has not furnished any supporting material in respect of the aforesaid claim, therefore, we are not inclined with the decision of the ld. CIT(A). Accordingly, this ground of appeal of the revenue is allowed.

Order pronounced in the open court on 07-03-2019

Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 07/03/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद