RADHA MOHAN SHARMA,JAIPUR vs. ACIT, JAIPUR

PER BHAGCHAND, AM

The assessee has filed an appeal against the order of the ld.

CIT(A)-III, Jaipur dated 24-10-2011 for the Assessment Year 2006-07

raising therein following revised grounds of appeal.

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

- Ganga Saran & Sons (P) Ltd vs ITO, 130 ITR 1 (SC) 2. Assumption of Jurisdiction on Presumption

That on the facts and in the circumstances of the case ld. CIT(A) has grossly erred in law and facts in upholding the assumption of jurisdiction for re-assessment. The re-assessment proceedings on this case were only based on presumption/ suspicion and were thus not validly initiated.

(a) That on the facts and in the circumstances of the case the ld. CIT(A) has grossly erred in law and facts in confirming the addition of Rs. 65,00,000/-on account of non-furnishing of evidence of return of the money to the Ranka Colonizers Pvt. Ltd. Addition is based on no evidence. The assessee has furnished all possible evidences.

(b) That Ranka Colonizers Pvt. Ltd surrendered undisclosed income and paid taxes and therefore double taxation is not permissible.

© That the authority below erred in not appreciating that assessee was mere agent and could only be taxed on receipt if any amounting to successful real estate deal and therefore, erred in confirming the addition of Rs. 65,00,000/-.

(d) The ld. CIT(A) further erred in upholding the addition which has been made without naming the head of income or section etc and thereby not following provisions of law.

(e) That the addition on the basis of statement of hostile person that too recorded behind the back of the assessee and never confronted to him.

That in the case of Nayan Tiwari for the Assessment Year 2006-07 ITA No.113/JP/2012 (on identical facts), the Hon'ble ITAT Jaipur bench, Jaipur has deleted total addition.

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

2.1 Apropos the above mentioned grounds of appeals of the assessee,

the relevant facts as emerges from the order of the ld. CIT(A) are as

under:-

‘’2.2 I have perused the assessment order and considered the material available on record. It is evident from the record that notice u/s 148 was issued after recording the reasons. In fact, after filing of the return in response to notice u/s 148, no request of appellant vide his letter dated 6-07-09, copy of the reasons was supplied to the appellant vide order sheet entry dated 7-07-09. Accordingly, the grounds so taken that the AO has erred in law and in on facts by initiating action u/s 147/148, is not having any merit and is rejected.

2.3 From perusal of records, it is seen that M/s. Ranka Colonizers Pvt. Ltd has paid Rs. 65 Lakhs to the appellant. Questionnaire was issued to the appellant on 23-06-2010. In the statement of the appellant so recorded as well as in his cross examination, the appellant has admitted that the amounts were received by him in cash from members of Ranka Group, as mentioned in the assessment order and not controverted by the appellant. Total amount received by him in cash amounts to Rs. 65

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

Lakhs. Moreover, the appellant was given show cause notice also as to why the addition of Rs. 65 Lakhs should not be made in his hands. The argument of the appellant that the amounts received by him were passed on either to the farmers or sellers and he was only working as agent has been rightly rejected by the AO. In view of the fact that the appellant has not given any evidence that he has passed on the amount received by him to the farmers/ sellers. Appellant has also failed to furnish any evidence of return of the money received from Ranka Group. In view of these facts and circumstances, the AO was justified I making addition of Rs. 65,00,000/-in the hands of appellant and I see no reason to interfere with the finding of the AO in this regards. Accordingly ground so taken by the appellant is rejected.’’

2.2 During the course of hearing, the ld.AR of the assessee prayed that

the ld. CIT(A) has erred in dismissing the appeal raised before him for

which the ld.AR of the assessee filed the written submission for allowing

the relief. The relevant contention of the ld.AR of the assessee as

mentioned in the written submission are as under:-

‘’..1.1 It is submitted that action taken u/s 148 by the AO of the searched person itself invalid because the AO has issued notice only on the basis of statement or claim of the searched person without providing any material taken behind him or statement of the persons…

2.1…..It is submitted that the search was conducted at the Ranka Group and the action in the present case has been taken on the statement and claim of the Ranka Group that they have paid cash and cheque to Shri Radha Mohan and the farmers / sellers between 07-11- 2005 to 07-03-2006. As the assessee has stated that (i) he has acted as an agent of M/s. Ranka Colonizer (P) Ltd (ii) that the amount received by him were passed on either to the farmer / seller or to (iii) that the 4

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

accounts of payments made to sellers/ farmers and were given to M/s. Ranka Colonizers Pvt Ltd. on the same day in the evening when such payments were made (v) that no money has been received by him towards commission from M/s. Ranka Colonizers Pvt. Ltd.

However, it is alleged that he has not proved his contention with the help of evidence. In this regard, it is submitted that as in the present case as the AO has not provided the document as statements of the persons of Ranka Group, seized record in the case of Rank Group, papers related to assessee despite various letter to AO he has failed to provide the same. In absence of which vital material evidence available in the record of the AO how the assessee can file its objection and details. Rather the AO has stated that they both (assessee and his counsel) has continuous to raise demand for providing the documents which were neither not relevant to their case or were third party documents which were not even intended to be used against them and the ld. CIT(A) has also repeated the same thing.

In this regard it is submitted that how it can be said or can be presumed by both the authority that the documents were either not relevant to their case or were third party documents which were not even intended to be used against them. When it was the admitted facts that in the case of assessee 148 has been given due to search conducted in the case of Ranka Group wherein the documents related to sale purchase of agriculture land, payment receipt, transaction related to assessee etc. All these shows contradictory approach of the AO because one side the AO on the basis of documents or statement of the searched person has taken the action against the assessee (third party) without confronting the same to the assessee and other side when the assessee has demanded the documents the AO stated that the documents belongs to the third party. Hence, hot and cold cannot blow in the same breath.

Further the AO did not provide any opportunity for cross examination and also not given any show cause notice before alleging so. In the case of Kanhaiya Lal (Huf) vs CIT & Anr.247 ITR 686 (All.) it has been held that ‘’whenever any material is proposed to be used against a party copies of the same should be supplied in advance to that part so that he can have an opportunity to explain the same or rebut it. Neither the statement of the third party nor the report on enquiries with the bank nor the report of intelligence wing of the department on which the Department was relying to take action against the assessee were confronted to him.

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

Statement not read in full: Further it is submitted that the AO has relied only their party evidence/claim/ statement which has been used against the assessee on the other hand the AO has ignored the statement of the assessee recorded on the very same date u/s 131 wherein he has fully explained all the modus operandi and also produced all the evidences and records/detail. However, the AO has failed to consider all these things in their true sense and perspective. If the AO has considered all these minutely the position could have been different. A statement should be read in toto not in partly. The AO has not given any basis or reasoning or evidence of accepting the claim or Ranka Group and denying the claim of the assessee.’’

2.3 On the other hand, the ld. DR supported the orders of the lower

authorities.

2.4 We have heard the rival contentions and perused the materials

available on record. In Ground No. 6 of appeal, the ld.AR of the assessee

had pleaded that no opportunity of effective hearing was provided and the

reply of the assessee and evidences produced were not considered. It was

also pleaded that no show cause notice was issued to the assessee. It is a

case where assessee has been charged for siphoning of money working

as agent between Ranka Colonizers and land owners. It was not a case of

earning income and not paying taxes. We noted from the available

records that the assessee was deprived of submitting all the relevant

records before the authorities below concerning to this issue. The ld.

CIT(A) had confirmed the addition. The assessee is also facing criminal

charges on such siphoning of the money. In such a factual matrix, it will

ITA No.300 /JP/2013 Shri Radha Mohan Sharma. vs ACIT, Central Circle-2 ,Jaipur

be in the interest of equity and justice to restore the appeal to the file of the AO for afresh adjudication with the direction to the AO to provide the effective hearing to the assessee. Thus the appeal of the assessee is allowed for Statistical purposes. 3.0 In the result, the appeal of the assessee is allowed for Statistical purposes. Order pronounced in the open Court on 05 -04-2018.

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