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Income Tax Appellate Tribunal, “B”
Before: HON’BLE SH. SANDEEP GOSAIN, JM & HON’BLE SH. G. MANJUNATHA, AM
ITO ward 5(2) Nand Bhagwandas 2nd floor, Mohan Plaza, Motwani, बिधम/ Khadakpada, Kalyan Narain Niwas, Dudh Vs. Naka, Ulhasnagar, Mumbai-400 005 स्थायीलेखासं./जीआइआरसं./ PAN No. ABPPM2840L (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Shri Bhadresh Doshi, AR प्रत्यथीकीओरसे/Respondentby : Ms. Bharti Singh, DR सुनवाईकीतारीख/ : 07.01.2019 Date of Hearing घोषणाकीतारीख / : 03.04.2019 Date of Pronouncement आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appeal filed by the assessee is against the order of Ld. CIT (Appeal) – 3, Mumbai dated 25.07.17 for AY 2007-08.
Nand Bhagwandas Motwani, 1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming reopening of assessment u/s 147.
2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming addition of 1,52,00,000 as income of the appellant from undisclosed sources.
3 On the facts and circumstances of the case and in law, the learned CIT(A) did not take cognizance of the fact that the impugned property, with regard to which the alleged on money has been added as income of the appellant, was purchased by Shivsharan Trading Pvt. Ltd. and not the appellant.
On the facts and circumstances of the case and in law, the learned CIT(A) ought to have appreciated that the appellant had not been provided copies of statements of various persons and other evidences, either during assessment proceedings or during remand proceedings and hence it has resulted into violation of principles of natural justice.
On the facts and circumstances of the case and in law, the learned CIT(A) ought to have appreciated that addition made on the basis of verbal statement cannot be confirmed without providing an opportunity to the Nand Bhagwandas Motwani, appellant to cross examine that person whose statement had been recorded.
The brief facts of the case are that return of income declaring total income of Rs.8,77,150/- was filed on 31.07.2017. The case was reopened on the basis of information received from the Director of Investigation (Inv)-II, Mumbai, that during the search and seizure on M/s Hiranandani Group Builders and Developers, it was noticed by the revenue that the assessee had given on-money payment of Rs.1,52,00,000/- to the above party for purchase of shop No. I at 'Emerald'. During the said search action, the Directors had given statement on oath of having received "On-Money", therefore, notice u/s. 148 was issued on 30.03.2017. Consequently, reasons for reopening were also provided to the assessee. After opportunity of hearing to the assessee, the assessment was ordered to be reopened and consequently, assessment order u/s 143(3) r.w.s 147 of the Act was passed thereby making additions of Rs.1,52,00,000/- to the total income of the assessee.
Nand Bhagwandas Motwani, Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, dismissed the appeal of the assessee. Now before us, the assessee has preferred the present appeal by raising the above grounds.
Ground No. 1 3. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming reopening of assessment u/s 147 of the Act.
4. In this regard, Ld. AR of the assessee reiterated the same arguments as were raised by him before Ld. CIT(A) and also relied upon the written submission submitted before Ld. CIT(A), which are contained in para no. 4.0 (1.1 to 2.34) of its order. It was submitted that the order of reopening passed by AO and upheld by Ld. CIT(A) is bad in law and thus the same be set aside.
Nand Bhagwandas Motwani, 5. Whereas on the contrary Ld. DR relied upon the orders passed by the revenue authorities.
We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by the parties as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the assessee in para no. 5.0 (i & ii) of its order. The operative portion of the order of Ld. CIT(A) is reproduced below:-
5.0 Ground No.1 is directed against the reopening of assessment u/s. 147 of the Act.
(i) In this regard, the objection raised by the appellant for reopening of assessment u/s.147 of the Act has been disposed off by the assessing officer, vide letter dated 23.03.2015 and the same is discussed from Para 5, page 7 of the assessment order. In this case, notice u/s.148 was issued on 30.03.2014 and the objection was raised only at the final stage i.e. on Nand Bhagwandas Motwani, 13.03.2015. The assessment order was passed u/s.143 (3) r.w.s. 147 of the Act on 27.03.2015, after giving adequate opportunity to the appellant, therefore, this ground of appeal is dismissed.
Even on merits also, the appellant failed, because the assessment was reopened u/s.147 on the basis of information received from the Director of Investigation (Inv.)-II, Mumbai, vide letter dtd. 11.03.2014 regarding "On- Money" received by the Hiranandani Group from various customers who have booked the flat/shop in various construction projects undertaken by the said group. The name of the appellant also figured in the said list and the appellant had paid "On- Money" of Rs.1,52,00,000/- in cash, over and above the cheque amount to M/s.Hiranandani Properties Pvt. Ltd. for purchase of Shop No.1 at Emerald (ii) On The information along with statement recorded u/s.132(4) of the Act of Shri.Niranjan Hiranandani & Shri.Surendra Hiranandani, who are Directors of the company had admitted of receiving "On-Money" from the appellant for purchase of Shop No.1 at Emerald. Therefore, this information along with statement recorded u/s.132(4), constituted a valid and tangible materials and has evidentiary value, which the assessing officer cannot ignore the content of the information. The information provided by Nand Bhagwandas Motwani, investigation wing is an integral and essential part of the Department, and the information is based on the fact that, Shri.Niranjan Hiranandani & Shri.Surendra Hiranandani had admitted on oath that they have received "On-Money". Thus, the information so provided is vital, significant and imperative, which needs verification. Hence, the Assessing Officer has rightly initiated action u/s.147 of the Act in accordance with law. Reliance is placed on the following judicial pronouncements:- a) Reliance is placed in the case of Bright Star Syntex (P) Ltd. vs. ITO reported in 71 taxmann.com 64(Bom) (2016), the Hon'ble Court held that where on basis of evidences collected and statement recorded during course of search of entry provider, Assessing Officer had reason to believe that unsecured loans received by assessee from certain persons escaped assessment, it could not be said that there was change of opinion. Similarly, in the case of the appellant, during the Sales Tax Department raids, the entry providers admitted by giving statements and affidavits that, they provide accommodation bills only. b) Also in the case of Peass Industrial Engineers(P) Ltd. vs. Dy.CIT reported in 73 taxmann.com 185(Guj) (2016), the Hon'ble Court held that where after scrutiny assessment, Assessing Officer
Nand Bhagwandas Motwani, received information from Investigation wing that entry operators of country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, Assessing Officer was justified in reopening the assessment. In fact, in the appellant's case, no assessment u/s. 143(3) was done prior to reopening of assessment u/s.147 of the Act. c) Reliance is placed as reported in 73 taxmann.com 185(Guj) (2016), the Hon'ble Court held that where after scrutiny assessment, Assessing Officer received information from investigation wing that entry operators were giving bogus entries to various beneficiaries, and assessee was one of such beneficiary, Assessing Officer was justified in reopening the assessment. In fact, in the appellant's case, no assessment u/s. 143(3) was done prior to this also. Though the facts may not be same, but in principle, the aforesaid decision is squarely applicable in the case of the appellant.
Therefore, the aforesaid decisions are squarely applicable in the case of the appellant. In view of the above stated facts, the appeal of the appellant on this ground is dismissed.
Nand Bhagwandas Motwani, 7. After having gone through the facts of the present case and hearing the parties at length, we find that although assessee had raised objection against reopening of assessment, but the same were disposed of by the AO vide letter dated 23.03.15. In this case, the assessment was reopened on the basis of information received from the Director of Investigation (Inv.)-II, Mumbai regarding "On- Money" received by Hiranandani Group from various customers including the assessee. It is important to mention that the name of the assessee also figured in the said list according to which, the assessee had paid "On-Money" of Rs.1,52,00,000/- in cash, over and above the cheque amount to M/s. Hiranandani Properties Pvt. Ltd. for purchase of Shop No.1 at Emerald. The information along with statement recorded u/s.132(4) of the Act on oath of Niranjan Hiranandani & Surendra Hiranandani, who are Directors of the company also admitted of having received "On-Money" from the assessee, therefore in these circumstances, the AO rightly concluded that this statement recorded u/s.132(4), constituted a valid and tangible materials and has evidentiary value. The information provided by investigation wing is received during the discharge
Nand Bhagwandas Motwani, of official duties and is an integral and essential part of the Department, therefore the said information can be the basis for the purpose of reopening. Even otherwise the said statements were recorded on oath and thus such information so provided is vital, significant and imperative, which needs verification. Hence, in such circumstance, the action u/s.147 of the Act can very well be initiated in accordance with law. While reaching to the above conclusion, we draw strength from the decision of Hon’ble Apex Court in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500, wherein it was held as under:- "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to lax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with Nand Bhagwandas Motwani, solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction iTO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court)."
Even Ld. CIT(A) while upholding the order of reopening had also relied upon the decision in the case of Bright Star
Nand Bhagwandas Motwani, Syntex (P) Ltd. vs. ITO reported in 71 taxmann.com 64(Bom) (2016), wherein the Hon'ble Court held that where on basis of evidences collected and statement recorded during course of search of entry provider, Assessing unsecured loans received by assessee from certain persons escaped assessment, it could not be said that there was change of opinion. Similarly, in the case of the appellant, during the Sales Tax Department raids, the entry providers admitted by giving statements and affidavits that, they provide accommodation bills only.
From the above discussion, decision of Hon’ble Apex Court and also keeping in view the facts of the present case, we are of the view that the word ‘reason in the phrase’ "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, then it can be said to have ‘reason to believe’ that an income had escaped assessment. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. Thus, at the stage of issue of notice, the only question is whether there was relevant
Nand Bhagwandas Motwani, material on which a reasonable person could have formed a requisite belief whether the materials would conclusively prove the escapement is not the concern at that stage. Since in this case the AO had the requisite information on the basis of statement on oath of Hiranandani’s wherein they had admitted on ooth of having received on money payment from the assessee. Therefore, in our view, the said information was enough for forming belief regarding escapement of income and whether the said material would conclusively prove the escapement is not the concern at that stage. Hence, Ld. CIT(A) was justified in confirming the order of reopening. The Ld. CIT(A) properly appreciated the issue after carefully examining the other aspects to challenge the validity of reopening issue. Accordingly, we uphold the order of the Ld. CIT(A) on the issue of reopening. Since the issue has been decided on the basis of the Hon’ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee’s case. Therefore, this ground raised by the assessee stands dismissed.
Nand Bhagwandas Motwani, Ground No. 2 to 5 10. These grounds raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in confirming the additions of Rs. 1,52,00,000 as income of the assessee from undisclosed sources, therefore we thought it fit to dispose of the same by this common order.
Ld. AR of the assessee reiterated the same arguments as were raised by him before Ld. CIT(A). Ld. AR also submitted that Ld. CIT(A) had ignored the fact that the impugned property, with regard to which the alleged on money has been added as income of the assessee, was purchased by Shivsharan Trading Pvt. Ltd. and not the assessee. Ld. AR also submitted that Ld. CIT(A) ought to have appreciated that the assessee had not been provided copies of statements of various persons and other evidences, either during assessment proceedings or during remand proceedings and hence it has resulted into violation of principles of natural justice. It was also submitted that the additions were made on the basis of verbal statements regarding which no opportunity of cross examination was given to the Nand Bhagwandas Motwani, assessee. Even though the assessee had been requesting for the same at all stages. Ld. AR also relied upon the written submission submitted before Ld. CIT(A), which are contained in para no. 4.0 (3.1 to 3.33) of its order and submitted that the additions made by the AO and confirmed by Ld. CIT(A) are without any basis or merits. It was submitted that the copies of statements recorded u/s 132(4) of the Act were not provided to the assessee even inspite of the fact that the same were demanded in writing from the AO. It was submitted that the assessee had requested for permission of cross examine Niranjan Hiranandani, Surendera Hiranandani and various other employees of Hiranandanai Group on whose statements, additions of Rs. 1.52 cr. were made. Ld. AR drawn our attention to the order of AO, wherein the reply of the assessee which was received in the office of the AO on 13.03.15 is reproduced, wherein also, it was pin pointed by Ld. AR that in the said reply also, the assessee had sought copy of statements and other material from the AO and also requested opportunity of cross examination, but the same was denied. It was submitted that Ld. CIT(A) had also ignored these facts and had decided this issue against the assessee. Ld.
Nand Bhagwandas Motwani, AR relied upon the decisions in the case of Sachin Kumar Surya Vrs. ITO (ITA no. 6234/Mum/16), ITO vrs. Nikhil Vinod Agrawal (ITA No. 2574/Mum/17), etc, wherein in the case of other buyers, the identical additions made on the basis of statement of Niranjan Hirannadani were deleted. It was also submitted that in the absence of opportunity of cross examination, the entire assessment be declared as void as had been held in the case of Andaman Timber Industries Vrs. CCE (Civil Appeal No. 4228 of 2006), CIT vrs. Sunil Dhadda (SC) SLP No. 9432/2018.
On the other hand, Ld. DR relied upon the orders passed by the revenue authorities.
We have heard the counsels for both the parties and we have also perused the material placed on record, judgment cited by the parties as well as orders passed by the revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the assessee in para no.
Nand Bhagwandas Motwani, 6.0 (iv) of its order. The operative portion of the order of Ld. CIT(A) is reproduced below:-
(iv) CONCLUSION:-
Considering the totality of the facts of the case, I am of the opinion that, the assessing officer has rightly brought to tax the "On-Money" paid to Hiranandani Group as undisclosed income of the appellant and further substantiated the addition as follows:- a) The "on-money" paid by the appellant has been finally admitted on oath recorded u/s.132(4) of the Act by Mr.Niranjan Hiranandani on 14.03.2014, the main Director and Promoter of the Group. The name of the appellant appears in the list of persons who have paid "On-money" in cash and the details of cash payments of Rs.1,52,00,000/- on various dates have been discussed at page 3 of the assessment order and the details of payments are as below:-
Name of purchaser Shop & name of Date of On-Money Amount of On- Paid to whom bldg paid Money paid Nand B. Motwani Shop/1 Emerald 24.04.2006 Rs.1,00,000 Hiranandani Properties Pvt. Ltd. Do Do 27.04.2006 Rs.10,00,000 Do
Nand Bhagwandas Motwani, Do Do 03.05.2006 Rs.15,00,000 Do Do Do 05.05.2006 Rs.40,00,000 Do Do Do 11.05.2006 Rs.20,00,000 Do Do Do 15.05.2006 Rs.30,00,000 Do Do Do 17.05.2006 Rs.36,00,000 Do b) In the remand proceedings, the AO has called for a report from the Dy.CIT Central Circle-1(2), Mumbai, who is assessing the Hiranandani Group cases, and the officer has confirmed that, the appellant has paid "On- Money" to the Hiranandani Group and the Hiranandani group companies had filed application before the Settlement Commission and the relevant portion of reply is reproduced as below:- "The assessee group companies filed application before Income-tax Settlement Commission wherein, they have offered the "On-money" received by the group companies from all such flat purchasers in their application in the Statement of Facts(though they had offered net profit on percentage of gross sales for tax purposes). The Settlement Commission has passed the final order u/s.245D(4) of the Income-tax Act, 1961 in the month of August 2016 and it has settled the issue of "On-Money" received by the Group Companies." In the remand proceedings, the AO has responded to the query raised by the appellant and at this juncture, the Directors and Promoters, who had given the statement of receiving "On-Money" from the appellant,
Nand Bhagwandas Motwani, would not have attended before AO as they have already offered the undisclosed income before the Settlement Commission. In fact, the complete details of receiving On-Money has been discussed in the assessment order, therefore, the evidence found against the appellant is sufficient enough to prove that the appellant has paid "On- Money". The argument made by the AR of the appellant is basically irrelevant as no purchasers will be caught red-handed of paying "On-Money" to builders and normally, in this line of business, the component of "On-Money" is always there. Therefore, in this case, the circumstantial evidence proves that the appellant has paid "On-Money" and in this regard, reliance is placed on the decision of various judicial pronouncements as follows- jjM/s.Diamond Investment and Properties reported in order dated 29.07.2010, wherein it was held that transfer of any on-money from one hand to the other is best known to the parties concerned and it is within their exclusive knowledge. JJj. In the case of J.S.Parkar reported in 94 ITR 616 the .Hon'ble Bombay High Court held that under the I.Tax Act, inference can be drawn upon the basis of circumstantial evidence. JJJj Sumati Dayal vs. CIT reported in 214 ITR 801(SC)-held that as laid down by Nand Bhagwandas Motwani, this court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. Similar view has been taken in the case of CIT vs. Durga Prasad More (1971) 82 ITR 540, at pp. 545, 547). It is true that the strict Rules of Evidence are inapplicable to the proceedings under the I.T.Act, 1961, however, that does not mean that the principles of Evidence Act are inapplicable to the proceedings under the LT Act. Relying on the provisions of section 110 of Indian Evidence Act and the decision of Hon'ble Supreme Court in the case of Chuharmal reported in 172 ITR 230 (SC) the AO held that third party evidence has evidentiary value and therefore the same can be used if corroborated by other circumstantial evidence. From the above discussion, the component of "On- Money" issue has already been finally settled as the Hiranandani Group has already offered the 'On- money' received from all such flat/shop purchasers before the Settlement Commission. In fact, no purchasers would have been caught red-handed of paying "On-Money" to builders and normally, in this line of business, the component of "On-Money" is always there. Therefore, whatever argument made by Nand Bhagwandas Motwani, the appellant will not serve the purpose as there are enough evidences against the appellant of paying the "On-Money" to Hiranandani Group. In view of the above stated facts, the appeal of the appellant on this ground is dismissed and the addition made by the AO on account of On-money is sustained.
After having gone through the facts of the present case and hearing the counsels at length, we found that although the assessee had raised specific grounds /point, wherein he had specifically requested for seeking documents on the basis of which the additions were made by the AO and had also sought opportunity to cross examine. Ld. AR had also drawn our attention on para no. 6 (iii) of the order of Ld. CIT(A), wherein in response to the remand report, the assessee had specifically requested for providing opportunity to inspect and verify the evidences /documents, the details of which are contained in the request letter. We also noticed that the assessee had also sought opportunity for cross examination of the concerned persons, but the AO and Ld. CIT(A) had ignored the said request of the assessee and had not specifically
Nand Bhagwandas Motwani, dealt the same on merits. While dealing with the appeal, Ld. CIT(A) had dismissed the said specific grounds raised by the assessee only by holding that since it was admitted by Hiranandani’s that they had received on money from the assessee and also that, the Hiranandani group companies had filed application before the settlement commission and had offered the undisclosed income. Therefore, according to Ld. CIT(A), the same was sufficient enough to prove that assessee had paid on money.
To our mind, this stand of Ld. CIT(A) is not sustainable in law as the evidence of third party, although has evidentiary value, but the same can only be used, if it is corroborated by other evidences. However in the present case, no such corroboratory evidence was brought on record apart from the statement of Hiranandani’s.
We are of the considered view that opportunity to cross examination is an integral part for adhering to the principles of natural justice as has been held by Hon’ble Supreme Court in the Nand Bhagwandas Motwani, case of Ayaaubkhan Noorkhan Pathan Vrs. The State of Maharashtra & Ors. (civil appeal no. 7728 of 2012 and order dated 8th November, 2012]. Even the Constitution Bench of Hon’ble Supreme Court in the case of State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, had held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice.
It is true that the powers of Ld. CIT(A) are co-terminus with that of the AO and the Ld. CIT(A) could himself carry out further investigation or give necessary directions as he thinks fit under the circumstances to the AO.
Be that as it may, it is the primary duty, which is bestowed
Nand Bhagwandas Motwani, upon Ld. CIT(A) is to bring on record the complete and all relevant facts of the case while deciding the appeal. It would be relevant here to quote from the judgment of Hon’ble Delhi High Court in the case of CIT vrs. Jansampark Advertising and Marketing Pvt. Ltd. Dated 11.03.15, wherein it was held as under:- 35. Assessment proceedings under the Income Tax Act are not a game of hide and seek. The inquiry in the wake of a notice under Section 148 is not an empty formality. It must be effective and with a sense of purpose. There is an elaborate procedure set out which requires scrupulous adherence and followed up on. In the hierarchy of the authorities, the AO is placed at the bottom rung. The two layers of appeals, before the matter engages the appellate jurisdiction of this court, are authorities vested with the jurisdiction, power and obligation to reach appropriate findings on facts. Noticeably, it is only the appeal to the High Court, under Section 260-A, which is restricted to consideration of "substantial question of law", if any arising. As would be seen from the discussion that follows, the obligation to make proper inquiry and reach finding on facts does not end with the AO. This obligation moves upwards to CIT (Appeals), and also ITAT, should it come to their notice that there has been Nand Bhagwandas Motwani, default in such respect on the part of the AO. In such event, it is they who are duty bound to either themselves properly inquire or cause such inquiry to be completed. If this were not to be done, the power under Section 148 would be rendered prone to abuse.
The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, "further inquiry", in terms of sub-section (4) which reads as under:-
Nand Bhagwandas Motwani, ―The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals).
The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question.
Apart from above, we find that Hon’ble Apex Court in the case of Kapurchand Shrimal Vrs. CIT 1981 131(ITR) Page 451 has held that the duty of the Tribunal does not end with making a declaration that the assessments are illegal and it is duty bound to issue further directions. The appellate authority
Nand Bhagwandas Motwani, has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute and the statute does not say that such a direction cannot be issued by the appellate authority in a case of this nature.
Therefore, keeping in view the interest of justice, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to provide opportunity to the assessee to verify /inspect the evidences as are specifically sought by the assessee in para no. 6 (iii) (1) (a) of the order of Ld. CIT(A) and also to provide an opportunity of cross examination of the persons, whose statements were relied upon by the AO while making additions and thereafter pass afresh order. It is needless here to mention that before passing afresh order of assessment, the AO shall provide sufficient opportunity of hearing to the assessee.
Nand Bhagwandas Motwani, 21. Before parting, we may make it clear that our decision to restore the matter back to the file of AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law. With these directions, this ground of appeal raised by the revenue is partly allowed for statistical purposes.
In the net result, the appeal filed by the revenue stands partly allowed for statistical purposes.