C I T vs. SANJEEV KUMAR JAIN

ITA/638/2007HC Punjab & HaryanaPHHC01073356200716 January 2009Author: MR. JUSTICE SHAM SUNDER,MR.JUSTICE J.S. KHEHAR5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the AO's failure to afford the assessee an opportunity to cross-examine the four individuals whose statements formed the basis of the additions was a procedural defect rendering the assessment order unacceptable in law. The Court found merit in the Revenue's submission that the appellate authorities should have remanded the matter rather than outright negating the entire action. Consequently, the proceedings conducted by the AO after recording the statements of the four individuals were set aside. The Court granted liberty to the AO to re-initiate proceedings from the stage of recording the statements, provided he allows the assessee to cross-examine all four witnesses. The AO was directed to pass a fresh order in accordance with law, without collecting further information beyond what was available at the time of the original order dated 31.3.2004. The appeal was disposed of with this liberty.

What were the facts?

The assessee, Sanjeev Kumar Jain, filed his income tax return for assessment year 1996-97 on 30.4.2003. The Assessing Officer (AO), under sections 143/147, passed an order on 31.3.2004 making three additions: Rs.2,12,750/- from share transactions, Rs.1,03,317/- as unexplained bank credits, and Rs.30,000/- for a plot purchase. The AO relied on statements recorded from Shri H.S. Maheshwari, Shri Parveen Mittal, Shri Sanjay Hasija, and Shri Rajinder Gulati, without confronting the assessee with these statements or allowing cross-examination. The Commissioner of Income Tax (Appeals) accepted the assessee's appeal on 15.9.2004, holding that cross-examination was imperative. The Income Tax Appellate Tribunal (ITAT) upheld this decision on 7.12.2005. The Revenue appealed to the High Court against both appellate orders.

What were the issues?

1. Whether the High Court should uphold the orders of the CIT(A) and the ITAT, which set aside the assessment order due to the denial of cross-examination of witnesses whose statements formed the basis of additions. Assessee's Contention: The assessee argued that the AO failed to provide an opportunity to cross-examine the individuals whose statements were recorded at his back, despite oral and written requests. This procedural defect rendered the AO's assessment order unacceptable. Revenue's Contention: The Revenue acknowledged the procedural defect of not allowing cross-examination. However, it contended that instead of negating the entire action, the appellate authorities should have annulled the procedural defect and remanded the matter for re-determination from the stage where the defect occurred.

Which sections of the Income-tax Act were involved?

Section 143,Section 147

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IN THE HIGH COURTOF PUNJAB AND HARYANA, CHANDIGARH.

Date of decision: 16.1.2009 Commissioner of Income Tax-1,Ludhiana ....Appellant vs. Sanjeev Kumar Jain . ..Respondent CORAM: HON'BLE MR.JUSTICE J.S.KHEHAR. HON'BLE MR.JUSTICE NAWAB SINGH. --- Present: Mr.Rajesh Sethi, Advocate, for the appellant. Mr.Sandeep Goel, Advocate, for the respondent-assessee. -- J.S.KHEHAR,J. (Oral) The respondent-assessee filed his income tax return for the assessment year 1996-97 on 30.4.2003. The Assessing Officer on examining the same passed an order under sections 143/147 of the Income Tax Act, 1961 on 31.3.2004, wherein while completing the assessment, he made three additions to the declared income of the respondent-assessee, namely, a sum of Rs.2,12,750/- allegedly earned by the assessee as a consequence of purchase/sale of shares, a sum of Rs.1,03,317/- alleged to be unexplained credits found in the bank account of the respondent-assessee, as also a sum of Rs.30,000/- allegedly paid by the respondent-assessee for the purchase of a plot. It is not a matter of dispute that while arriving at the aforesaid conclusions the Asse

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