SODHANI FINANCIAL CONSULTANT PVT.LTD.,JAIPUR vs. ITO, JAIPUR

PER: DIVA SINGH, J.M. The present appeal has been filed by the assessee assailing the correctness of the order dated 08/12/2015 of Id. CIT(A)-I, Jaipur pertaining to 2009-10 assessment year on various grounds. The parties were heard only in respect of ground No.4, which reads as under:-

"4 Learned Income Tax Officer has erred in using a large chunk of material gathered behind back of the assessee without providing its copy to the assessee and without allowing it an opportunity to submit his explanation thereon rendering his assessment order to a nullity."

were sold on a premium in the month of February, 2009 by a company only two

months old challenged the addition before the CIT(A). The challenge was posed

on various grounds before the CIT(A) including the grounds that the material

relied upon to make the addition was never confronted to the assessee. The

said objections were dismissed by the CIT(A) holding as under:-

(v) The assessment proceedings further continued on 22.12.2014 and 26.12.2014 but the appellant never asked the AO in specific terms the material in the possession of the AO including the statements of Shri V. K. Jain and Shri S. K. Jain recorded by the investigation wing at Delhi.

(vi) The above facts clearly revealed that the appellant had waived his right before the AO itself by not objecting to the initiation of proceedings u/s 147 of the Act and not specifically requiring the material in possession of the AO for taking action against the appellant. Therefore, with this acquiescent on the part of the appellant, the appellant now cannot agitate that the information gathered behind his back was not confronted to it and no opportunity was given to it to explain its case. It is crystal clear from the reasons receded by the AO, as reproduced above, that during the course of search action in Shri S K Jain and Shri V K Jain at Delhi, it was established that they were providing accommodation entries through a number of entities controlled by them and were issuing cheques for share capital in lieu of cash. Further, the AO recorded that on the basis of seized material, it was found that the appellant had received accommodation entries amounting to Rs. 48 Lac from the concerns controlled by Shri S KJain and Shri V K Jain for which he bad given the details to the appellant as mentioned earlier.

(vii) The appellant, therefore, cannot be allowed to raise the contention that the material gathered at its back was not confronted to it and no opportunity was accorded to it by the AO as the gist of the material has already been communicated to it in the form of reasons recorded for reopening the case u/s 147 of the Act and the appellant had neverrequired the material collected by AO. In fact, the appellant never raised any objection about the initiation of proceedings u/s 147 of the Act."

at its back, the addition may be deleted. Though, the Id. Sr.DR heavily relied

upon the impugned order, however, was unable to support its case as to how

and why the material collected at the back of the assessee should not have

been confronted.

the record. I find that the prayer of the Id AR that the department having

collected the material at the back of the assessee and relying upon the same

has committed such an error, which warrants that the addition be deleted,

cannot be accepted. The procedural violation is capable of being addressed by

addressing the stage at which the lapse has occurred. Accordingly, setting aside

the aforesaid finding of the CIT(A), I am of the view that simply because the

assessee did not ask for the material in possession of the Assessing Officer and

did not object to the initiation of proceedings u/s 147 of the Act, at the assessment

stage, cannot be a reason to conclude that the assessee has waived its rights for

all times to come. It is well settled that the jurisdictional issue being a foundational

issue has to be justified whenever it is challenged by the affected party. The law

does not contemplate that the foundational fact and challenge thereto can be said

to be waived in the peculiar facts of the present case. The assessee is within his

rights to challenge the jurisdiction before the CIT(A). The challenge having been

posed has to be addressed by the tax authorities. Accordingly, the impugned

order is set aside and the issue is restored back to the file of the Id. CIT(A) with a

direction to confront the assessee within the material relied upon and decide the

jurisdictional issue which the assessee has raised and thereafter to proceed to

decide the issue on merits if so warranted. The said order was pronounced in the

open court at the time of hearing in the presence of the parties.

Sd/- (Diva Singh) Judicial Member Dated:- 7th April, 2017, *Ranjan/Poonam (CHD) Copy of the order forwarded to; 1. Appellant- Sodhani Financial Consultant Pvt, Ltd., Jaipur. 2. The Respondent- The I.T.O., Ward-3(5), Jaipur. 3. The CIT 4. the CIT (A) 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 191/JP/2016)

By order;

Asstt. Registrar