SURESH KUMAR JAIN,NEW DELHI vs. ITO, WARD- 35(2), NEW DELHI

The assessee has filed the appeal against the order dated

21.2.2018 passed by Ld. CIT(A) relevant to assessment year 2014-15.

Application of the assessee for admission of additional/revised ground in

Appeal and stated that at the time of filing of appeal, inadvertently one

ground of appeal could not be taken. It is also submitted that there is no

malafide, intentional delay technique in revising the grounds of appeal.

She drew my attention towards page no. 02 of the Ld. CIT(A) wherein,

vide ground no. 3 (wrongly mentioned as ‘5’) the assessee has raised the

ground that “The AO erred in fact and law as well by not providing

reasonably opportunity of being heard”. She further drew my attention

towards Page no. 32 of Ld. CIT(A)’s order wherein the Ld. CIT(A) has

reproduced the plea of the Assessee that while making the addition of

Rs. 11,78,216/- the AO has relied on statements of Sh. Vikrant Kayan

without providing opportunity to the assessee for cross examination of

such person. Hence, in the interest of natural justice, she requested to

admit the following additional/revised ground of appeal which is legal in

nature, in view of the settled decision of the Hon’ble Supreme Court of

India in the case of NTPC 229 ITR 383 (SC).

“That Ld. AO as well as Ld. CIT(A) has erred in law as

well as on facts in not providing opportunity to cross

examination Sh. Vikrant Kayan, on whose statement Ld.

AO has relied for treating the exempt Long Term Capital

Gain claimed u/s. 10(38) of the Income Tax Act, 1961

of Rs. 11,78,216/- as undisclosed income.

additional/ revised ground raised by the assessee.

ground alongwith the orders passed by the Revenue Authorities, I find

considerable cogency in the contention of the ld. counsel for the assessee

has raised ground no. 3 (wrongly mentioned as ‘5’) i.e. “The AO erred in

fact and law as well by not providing reasonably opportunity of being

heard”. I further find that Ld. CIT(A) at page no. 32 of his order has

reproduced the plea of the Assessee that while making the addition of

Rs. 11,78,216/- the AO has relied on statement of Sh. Vikrant Kayan

without providing opportunity to the assessee for cross examination of

such person. Hence, I am of the considered view that in view of the

decision of the Hon’ble Supreme Court of India in the case of NTPC

Limited 229 ITR 383 (Supra), the additional ground raised by the assessee

vide Application is purely legal ground and did not require fresh facts

which is to be investigated and goes to the root of the matter. In the

interest of justice, I admit the aforesaid additional ground raised by the

assessee, in view of the case law of NTPC Limited (Supra) and proceed to

decide the additional ground first raised by the Assessee during the

hearing.

argued the revised/additional ground and stated that the addition in

dispute has been made by the AO and confirmed by the Ld. CIT(A) u/s. 68

of the I.T. Act on the basis of the statement of Sh. Vikrant Kayan, on

whose statement the AO has treated the exempt Long Term Capital Gain

claimed u/s. 10(38) of the Act of Rs. 11,78,216/- as undisclosed income

of the assessee, but both the revenue authorities have not provided the

opportunity to cross examination of Sh. Vikrant Kayan to the assessee.

She further submitted that non-providing of opportunity of cross

examination is against the principle of natural justice and against the

settled law. She further stated that the issue in dispute is squarely by

the decision of the ITAT, SMC, Delhi Bench wherein, the Tribunal vide its

order dated 06.11.2018 passed in ITA No. 3510/Del/2018 (AY 2014-15) in

the case of Smt. Jyoti Gupta vs. ITO has allowed the appeal of the

assessee exactly on similar facts and circumstances. Hence, she

requested to follow the aforesaid case and allow the appeal of the

assessee.

authorities and stated that assessee has been given opportunity of being

heard, but the assessee has not availed the same.

the assessment as well as impugned order and the case law cited before

me. I find considerable cogency in the contention raised by the assessee’s

counsel that addition was made on the basis of statement of Sh. Vikrant

Kayan, but the assessee was not granted the opportunity to cross

examine Sh. Vikrant Kayan, which ground was also raised before the Ld.

CIT(A). I am of the considered view that assessee has raised ground no.

3 (wrongly mentioned as ground no.5) before the Ld. CIT(A) in the

appeal requesting for granting reasonable opportunity of being heard. I

further find that Ld. CIT(A) in his impugned order at page no. 32 has

reproduced the plea of the Assessee that while making the addition of

Rs. 11,78,216/- the AO has relied on statement of Sh. Vikrant Kayan

without providing opportunity to the assessee for cross examination of

such person. In view of above, there is no doubt that assessee has

raised the ground of providing opportunity of cross examination of Sh.

Vikrant Kayan before the Ld. CIT(A) and also by way of revised/additional

ground before the Tribunal. I further note that exactly on the similar

facts and circumstances the ITAT, SMC, Delhi Bench vide its order dated

06.11.2018 passed in ITA No. 3510/Del/2018 (AY 2014-15) in the case of

Smt. Jyoti Gupta vs. ITO wherein, the SMC Bench has considered the

statement of Vikrant Kayan and has held that since the impugned

addition was made on the statement of Sh. Vikrant Kayan without

providing any opportunity to the assessee to cross examine the same,

which is in violation of principle of natural justice and against the law laid

down by the Hon’ble Supreme Court of India in the case of Andaman

Timber vs. CIT decided in Civil Appeal No. 4228 of 2006. For the sake of

convenience, I am reproducing the relevant portion of the ITAT, SMC,

Delhi Bench vide its order dated 06.11.2018 passed in ITA No.

3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs. ITO as

under:-

“13. Merely on the strength of statement of

third party i.e. Shri Vikrant Kayan cannot

justify the impugned additions. Moreso,

when specific request was made by the

assessee for allowing cross examination

was denied by the Assessing Officer. The

first appellate authority also did not

consider it fit to allow cross-examination.

This is in gross violation of the principles of

natural justice and against the ratio laid

down by the Hon'ble Supreme Court in the

case of Andaman Timber Vs. CIT Civil Appeal

No. 4228 OF 2006 wherein it has been held as

under:

“According to us, not allowing the assessee

to cross-examine the witnesses by the

Adjudicating Authority though the

statements of those witnesses were made

the basis of the impugned order is a serious

flaw which makes the order nullity inasmuch

as it amounted to violation of principles of

natural justice because of which the

assessee was adversely affected. It is to be

borne in mind that the order of the

Commissioner was based upon the

statements given by the aforesaid two

witnesses. Even when the assessee disputed

the correctness of the statements and

wanted to cross-examine, the Adjudicating

Authority did not grant this opportunity to

the assessee. It would be pertinent to note

that in the impugned order passed by the

Adjudicating Authority he has specifically

mentioned that such an opportunity was

sought by the assessee. However, no such

opportunity was granted and the aforesaid

plea is not even dealt with by the

Adjudicating Authority. As far as the Tribunal

is concerned, we find that rejection of this

plea is totally untenable. The Tribunal has

simply stated that cross-examination of the

said dealers could not have brought out any

material which would not be in possession of

the appellant themselves to explain as to

why their ex-factory prices remain static. It

was not for the Tribunal to have guess work

as to for what purposes the appellant

wanted to cross-examine those dealers and

what extraction the appellant wanted from

them. As mentioned above, the appellant

had contested the truthfulness of the

statements of these two witnesses and

wanted to discredit their testimony for which

purpose it wanted to avail the opportunity of

cross-examination. That apart, the

Adjudicating Authority simply relied upon the

price list as maintained at the depot to

determine the price for the purpose of levy

of excise duty. Whether the goods were, in

fact, sold to the said dealers/witnesses at

the price which is mentioned in the price list

itself could be the subject matter of cross-

examination. Therefore, it was not for the

Adjudicating Authority to presuppose as to

what could be the subject matter of the

cross-examination and make the remarks as

mentioned above. We may also point out

that on an earlier occasion when the matter

came before this Court in Civil Appeal No.

2216 of 2000, order dated 17.03.2005 was

passed remitting the case back to the

Tribunal with the directions to decide the

appeal on merits giving its reasons for

accepting or rejecting the submissions. In

view the above, we are of the opinion that if

the testimony of these two witnesses is

discredited, there was no material with the

Department on the basis of which it could

justify its action, as the statement of the

aforesaid two witnesses was the only basis

of issuing the Show Cause. We, thus, set

aside the impugned order as passed by the

Tribunal and allow this appeal.”

totality, I do not find any merit in the

impugned additions. The findings of the

CIT(A) are accordingly set aside. The

Assessing Officer is directed to allow the

claim of exemption u/s 10(38) of the Act.”

present case and respectfully following the order of the

Tribunal, SMC Bench, Delhi in the case of Smt. Jyoti Gupta vs.

ITO (Supra) and in view of the law settled by the Hon’ble

Supreme Court of India in the case of Andaman Timber vs. CIT

(Supra), on identical facts and circumstances, the addition in

dispute is deleted and the appeal of the assessee is allowed.

The decision is pronounced on 24/01/2019.

Sd/- (H.S. SIDHU) JUDICIAL MEMBER

Dated: 24/01/2019

“SRBHATNAGAR”