ANIL MODI,CHENNAI vs. ITO, NON CORPORATE WARD 11(1, CHENNAI

Shri Anandd Babunath, the Ld. representative for the assessees, submitted that the Assessing Officer found a credit of ₹75,29,384/- in the books of account in the case of the assessee Smt Suman Modi and ₹77,41,463 in the case of the assessee Shri Anil Modi. According to the Ld. representative, each assessee has purchased shares of Kailas Auto Finance Ltd. for ₹2 lakhs and the same were sold and the profit was deposited in the account. According to the Ld. representative, the shares were purchased through stock exchange. The assessees have filed cover note and other material to substantiate that the shares were purchased through stock exchange. However, the Assessing Officer concluded that the stocks were not purchased through stock market. The Assessing Officer has not examined the material filed by the assessee. Moreover, according to the Ld. representative, the statement recorded from various persons including that of Shri Sunil Dokania, was not furnished to the assessees. In the absence of any material, according to the Ld. representative, the Assessing Officer has come to a wrong conclusion that there was unexplained deposit of ₹75,29,384/- and ₹77,41,463/- respectively, which were confirmed by the CIT(Appeals).

We heard Shri A. Sasikumar, the Ld. Departmental Representative, also. According to the Ld. D.R., the Assessing Officer found that the transaction was not carried out through any stock exchange. Moreover, bypassing the trading process of stock exchange, the assessees entered into transaction. According to the Ld. D.R., the so-called bills / vouchers filed by the assessees are only internal one. Moreover, the assessees have not declared investment in the shares of Kailas Auto Finance Ltd. According to the Ld. representative, each assessee, in fact, invested ₹2 lakhs in the shares of Kailas Auto Finance Ltd. Ultimately, M/s Kailas Auto Finance Ltd. merged with another company. Shri Sunil Dokania was examined and he admitted that he was providing the accommodation entry in the form of share capital, share premium, etc. The Ld. D.R. further submitted that the assessees never asked for copies of statement at any point of proceeding. Moreover, the assessees know very well about the statement of Shri Sunil Dokania with whom the assessees had transaction. Therefore, according to the Ld. D.R., non-furnishing of statement would not vitiate the proceeding.

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the entire assessment was based on the statement recorded from Shri Sunil Dokania and others. It is also not in dispute that copies of such statements were not furnished to the assessees. The contention of the Revenue appears to be that the assessees never asked for copies of statement. This Tribunal is of the considered opinion that whether the assessees asked for copy of statement or not, it is a bounden duty of the Revenue to furnish copy of such statement when it is a basis for making assessment. The assessment proceeding being a judicial proceeding, the assessees should be put on notice of all the materials against them before passing any order. Since such an exercise was not done by the Revenue, this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, orders of both the authorities below in the case of both the assessees are set aside and the entire issue of addition made under Section 68 of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter after furnishing copies of statement recorded by the Revenue to the assessees and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessees.

In the result, both the appeals filed by the assessees are allowed for statistical purposes.