SRI M.HEMRAJ ,BANGALORE vs. INCOME TAX OFFICER WARD-5(2)(2), BANGALORE

Date of hearing : 15.11.2017 Date of Pronouncement : 17.11.2017 O R D E R These appeals are preferred by the assessees against the respective order of CIT(Appeals) on common grounds. Therefore, these appeals are being disposed of through this consolidated order. We, however, for the sake of reference, extract the grounds of appeal raised in hereunder:-

“1. CIT(A) grossly erred in ignoring the plea of the appellant on the very jurisdiction of the AO for re-opening under S.147 urged in the appeal & argued and hence the impugned order is unsustainable.

2. The order of CIT (A) insofar as it is prejudicial to the interest of the appellant, is bad and unsustainable in the eye of law as the same is passed without application of mind &contrary to the settled position of law laid down by the jurisdictional High Court.

3. The order of CIT(A) is not only without application of mind & also contrary to facts borne out on record, that the Appellant had declared the investment during the relevant year by duly reflecting the investment in Books & moreover, the appellant had sold the shares in De-mat format after holding the same for more than a year and hence the claim of exemption under S.10(38) was in order.

4. The CIT(A) also erred in ignoring the plea of the appellant that the AO had made addition without providing an opportunity to cross examine those persons whose statements were used against him nor was AO's action proper or admissible when he used a letter from VP, M/s. NSE.

5. Without prejudice, the CIT(A) ought to have appreciated that the appellant had satisfied the tests laid down by the jurisdictional High Court in the case of M/s. Bhoruka Engineering Services for claiming exemption under S.10(38) of the Act.

6. CIT(A) also erred in ignoring the afore-said decision as also a catena of other orders/decisions relied on by the appellant, without quoting any reason/s and hence the impugned order is unsustainable. 7. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”

“5. Having carefully examined the orders of lower authorities in the light of rival submissions, I find that during the course of search conducted upon the Mukesh Choksi group, statement of Mukesh Choksi was recorded and in his statement he has admitted that he was providing accommodation entries to those who were interested to earn capital gain. On a careful perusal of the assessment order, I find that there is no finding with regard to the supply of statement of Mukesh Choksi to the assessee. Moreover, nothing is available on record, wherefrom it could be inferred that assessee was ever allowed to cross-examine Mr. Mukesh Choksi. It is settled position of law that statement or the evidence which is being relied upon by the AO for making the addition in the hands of assessee, the same should be confronted to the assessee and the assessee should be allowed to cross- examine the witness in this regard.

6. From a careful perusal of the orders of lower authorities, it is quite evident that statement of Mr. Mukesh Choksi was relied

on for making the addition, but assessee was never allowed to cross-examine him. In these circumstances, I am of the view that the AO was not justified in making addition in the hands of assessee, without allowing the assessee to cross-examine Mr. Mukesh Choksi, whose statement was relied upon for making the above additions. I accordingly set aside the order of CIT(Appeals) and restore the matter to the file of AO with a direction to first confront the statement of Mr. Mukesh Choksi to the assessee and allow him to cross-examine Mr. Mukesh Choksi to dig out the truth in this regard. Accordingly, the appeal of assessee is allowed for statistical purposes.”

Pronounced in the open court on this 17th day of November, 2017.