PR COMMISSIONER OF INCOME TAX LUDHIANA vs. JAGPREET SINGH

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ITA/181/2016HC Punjab & HaryanaPHHC01110370201610 May 2017Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE HARMINDER SINGH MADAAN3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the matters ought not to rest by default and that it was necessary for the authorities to consider all the facts and decide the matter on merits. The Court found that the procedural issues raised by the assessees regarding denial of inspection and cross-examination were significant. Consequently, the impugned order and judgment of the Tribunal were set aside and the matters were remanded back to the Tribunal. The Tribunal was given the liberty to decide the matter in any manner it deemed fit, including further remanding the matter if necessary, particularly for the purpose of adducing evidence. The Court directed the respondents (assessees) to inform the appellants (Revenue) in writing of the documents they desired by 20.05.2017, to which the appellants were to respond in writing. If documents were unavailable, the appellants were to state so. The assessees would then have the liberty to obtain documents as per law. Parties were to be afforded an opportunity of being heard and of cross-examining relevant witnesses. The ratio is that procedural fairness, including the right to inspect documents and cross-examine witnesses, is paramount, and where these rights are allegedly denied, the matter should be remanded for a proper adjudication on merits.

What were the facts?

These appeals by the Principal Commissioner of Income Tax-2, Ludhiana (Revenue) are against the order of the Income Tax Appellate Tribunal (Tribunal) which had allowed the appeals of the respondents/assessees, Jagpreet Singh and Amandeep Singh. The assessment year in question is 2010-2011. The dispute arose from the sale of a property in 2008 by Jaswant Singh (75% owner) and his son Rahul Sagar (25% owner) to three brothers, two of whom are the respondents. Jaswant Singh and Rahul Sagar later filed an FIR alleging theft of approximately ₹2 crores in cash from their premises, which they allegedly stated was received from the sale of the property to the respondents and a third brother. The Assessing Officer added proportionate amounts to the assessees' incomes. The Tribunal noted that the assessees were denied inspection of certain documents, including statements of Jaswant Singh, his bank statements, and books of account, and were also allegedly not permitted to cross-examine their vendors.

What were the issues?

1. Whether the Tribunal erred in allowing the assessees' appeals without a proper adjudication on merits, considering the procedural irregularities alleged by the assessees regarding denial of inspection of documents and cross-examination of vendors? (Mixed question of law and fact, concerning principles of natural justice and procedural fairness under the Income Tax Act, 1961). Assessee's contentions: The assessees argued that they were denied a fair hearing as they were not provided inspection of crucial documents, including statements of their vendors (Jaswant Singh and Rahul Sagar), their bank statements, and their books of account. Furthermore, they contended that they were not permitted to cross-examine their vendors, which prejudiced their case. They relied on the principle that a party must be given an opportunity to inspect documents and cross-examine witnesses to present their defense effectively. Revenue's contentions: The Revenue contended that the assessees refused to avail the opportunity of cross-examination on the ground that they had not been given inspection of the documents. The Revenue argued that the assessees themselves created this situation by not proceeding with the cross-examination when offered.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-181-2016 (O&M) Date of decision:- 10.05.2017 Pr. Commissioner of Income Tax-2, Ludhiana ...Appellant(s) Versus Jagpreet Singh ...Respondent ITA-207-2016 (O&M) Pr. Commissioner of Income Tax-2, Ludhiana ...Appellant(s) Versus Amandeep Singh ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE ANUPINDER SINGH GREWAL Present:- Mr. Zora Singh Klar, Advocate, for the appellant(s). Mr. Akshay Bhan, Senior Advocate, with Mr. H.P.S. Sandhu, Advocate, for the respondents. * * * * S.J. VAZIFDAR, C.J. (ORAL) These two appeals are under Section 260 A of the Income Tax Act, 1961 against the order of the Tribunal allowing the respondents’/assessees’ appeals against the order of the CIT (Appeals) confirming the Assessing Officer’s order. The matters pertain to the assessment year 2010-2011. 2. As we intend remanding the matters, it is necessary to refer to the disputes briefly:- One Jaswant Singh and his son Rahul Sagar had purchased a property in the year 2008. Jaswant Singh had a 75% ITA-181-2016 (O&M) ITA-207-2016 (O&M) 2 interest therein and his son had a 25% interest therein. In March, 2010, they sold the property to three brothers. Two of the brothers are the respondents in the above appeals. An appeal has not been filed against the third brother on the ground of tax effect. Jaswant Singh and Rahul Sagar had filed an FIR alleging that an amount of about ` 2 crores in cash was stolen from their premises. They ultimately allegedly stated that the cash was obtained in respect of the sale of the property by them to the respondents herein and to the third brother. It is in view of this that proceedings were initiated against the respondents/assessees. The Assessing Officer added the amounts in proportion of the shares of the respondents and their brother to their respective incomes. 3. The order of the Tribunal notes that the respondents had not been given inspection of certain documents especially one of the statements made by Jaswant Singh and his bank statements and the books of account. The respondents further alleged that they were not permitted to cross-examine their vendors. The appellants on the other hand contend that the respondents and their brother refused to avail the opportunity of cross-examination on the ground that they had not been given inspection of the documents. 4. Considering the facts of these cases, the matters ought not to rest by default. It is necessary for the authorities to consider all the facts and decide the matter on merits. 5. The appeals are, therefore, disposed of by the

following order:- (i) The impugned order and judgement is set aside and remanded to the Tribunal. It will be open to the Tribunal to decide the matter in such a manner as it thinks fit including

ITA-181-2016 (O&M) ITA-207-2016 (O&M) 3 by remanding the matter further, if necessary, especially for the purposes of adducing the evidence. (ii) The respondents shall on or before 20.05.2017 inform the appellants in writing the documents that they desire. The appellants shall respond to the same in writing. If any of the documents are not available with the appellants, they shall state so in writing. Needless to add that it will be open to the respondents in that event to obtain the documents in accordance with law. The parties shall thereafter be afforded an opportunity of being heard and of cross-examining the relevant witnesses. (S.J. VAZIFDAR) CHIEF JUSTICE (ANUPINDER SINGH GREWAL) JUDGE 10.05.2017 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2017.05.11 11:33 I attest to the accuracy and integrity of this document Chandigarh

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