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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri P.M. Jagtap(KZ) &Shri A. T. Varkey]
ORDER
Per Shri A.T Varkey, JM
This is an appeal preferred by the assessee against the order of Ld. CIT(A)-15, Kolkata dated 26.02.2019 for AY 2014-15.
At the outset, the Ld. AR of the assessee, Shri Miraj D. Shah, pointed out that the impugned order is an ex parte order and the assessee did not get any notice of fixation of hearing before the Ld. CIT(A) and therefore the assessee could not be present before him. Moreover, according to the Ld. AR a perusal of the assessment order would reveal that the A.O has drawn adverse inference against the assessee on the strength of third party statement and the assessee was not given opportunity to cross-examine the maker of this third party; and therefore the third party statement which was not tested on the touchstone of cross-examination could not have been used against the assessee. Therefore, according to Ld. AR, the omission on the part of A.O to facilitate cross-examination of the third party violates principles of natural justice. This contention of Ld. AR could not be controverted by Ld. DR, so we are of the view that the addition made solely on the strength of third party, which has not been cross examined, could not have survived for violation of natural justice. In such an event natural justice demands that assessee be given opportunity to cross-examine the maker of the adverse statement, which was the basis of adverse view. Since the assessee did not get proper opportunity before the A.O to even cross-examine the third party who made the statement against the assessee, we relying on the decision of the Hon'ble Supreme Court in Tin Box Company Ltd. vs. CIT (2001) 249 ITR 216 (SC), set aside the assessment back to AO for de-novo action. The Lordship held in Tin Box (supra) as under:
"It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income- tax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as afore- stated."
Therefore, in the light of the aforesaid decision of the Hon'ble Supreme Court, since the assessee did not get proper opportunity before the A.O to cross-examine the maker of the adverse/incriminating statement if any made against the assessee which was the basis for A.O to draw adverse inference/view against the assessee, we find merit in the contention of the Ld. AR that there was violation of principle of natural justice in this case.
Therefore for the ends of justice to both the parties, we set aside the impugned order of the Ld. CIT(A) and restore the assessment back to the file of A.O with a direction to the A.O to furnish copy of the third party to the assessee and thereafter if there is any incriminating testimony against the assessee then the assessee should be provided an opportunity to cross-examine the maker of the statement which has been relied upon by the A.O to make additions as contended by Ld. AR, and thereafter hearing the explanation of the assessee and taking into consideration the statement submitted by the assessee, the A.O to frame de novo assessment.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order is pronounced in the open court on 15 -12-2021
Sd/- Sd/- (P. M. Jagtap) (A. T. Varkey) Vice-President Judicial Member Dated : 15 -12-2021 RS Copy of the order forwarded to:
1. 1. Appellant –M/s. JugantarMercantilesP.Ltd 4A, N.C DuttaSarani, Unit No. 401 4th Fl., Kolkata-700 001. 2 Respondent –DCIT, Circle7(1), AaykarBhawan, P-7 Chowringhee Square, Kolkata-700 069.
3. CIT(A)-, Kolkata (sent through e-mail) 4. CIT- , Kolkata.
5. DR, ITAT, Kolkata. (sent through e-mail) /True Copy By order,
Senior P.S./D.D.O, Income Tax Appellate Tribunal Kolkata