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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI D.T. GARASIA & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-30, Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’). 2. The grounds of appeal filed by the assessee read as under:
1. The learned CIT(A) erred in making the addition of Rs.2,20,41,146/-being purchases from Archana Traders and Gemini Steel Tubes P. Ltd. without M/s AVI Worldwide PAN Card copy, their telephone contact nos, excise details, bank statements, confirmation by one party etc., thus the primary onus was duly discharged by the assessee, therefore the addition ought to be deleted.
2. The learned CIT(A) failed to appreciate that merely because the parties had not responded to notice issued u/s. 133(6) of the Act, addition cannot be made, when the existences of party is proved and payment are through banking channel.
3. The learned CIT(A) failed to appreciate that once the primary onus of proof is discharged by the Assessee by producing the necessary details, it is the duty of the Assessing officer to issue summons u/s. 131 and invoke attendance of the parties, though the assessee had requested for calling a remand report from the Assessing officer, however it was declined by the learned CIT(A) without any reason.
4. Without prejudice and alternatively, addition of entire purchases of Rs.2,20,41,146/- of two parties not justified. This ground though specially raised in grounds of appeal and argued before the learned CIT(A), however the same was not adjudicated.
3. Briefly stated, the facts of the case are that the Assessing Officer (AO) asked the assessee, during the course of assessment proceedings, to furnish details of parties from whom purchases had been made. As per the details filed, he issued notice u/s 133(6) on 07.01.2013 to certain parties to verify the purchases. The AO observed that in the case of four parties, the notices came back unserved/not claimed. The parties were Archana Traders, Gemini Steel Tubes Pvt. Ltd., Associated Industries and Bharat Metal Industries. Then, he asked the assessee to file fresh address of the above parties. The AO again sent on 07.03.2013 notice u/s 133(6) to the above parties in the new address given by the M/s AVI Worldwide assessee. He found that no reply was received in the case of the following two parties:
Sr. Name of the purchase Amount (Rs.) Status of notice No. parties
Archana Traders 59,49,216 Not claimed
Gemini Steel Tubes P. 1,60,91,930 Unserved Ltd. Total 2,20,41,146 Thereafter, the AO asked the assessee to produce the above parties for verification. However, the assessee could file only the copy of the PAN card of Shri Dilip Doshi, Prop. of Archana Traders and Mobile No. of Shri Vinod Gupta, Director of the Gemini Steel Tubes Ltd. The assessee failed to produce the above parties before the AO for verification. As the assessee failed to produce the above two parties for verification, the AO made an addition of Rs.2,20,41,146/- to the total income shown by the assessee. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the course of appellate proceedings before him, it was submitted by the assessee that it is engaged in the manufacturing activity and once goods are received and payment made, the transaction is completed, therefore, merely because the above two M/s AVI Worldwide 133(6), and, without summoning the above parties and opportunity of cross-examination provided to the assessee, no addition can be made on the above account. However, the Ld. CIT(A) was not convinced with the above explanation, as the assessee failed to produce the above parties before the AO for verification. He agreed with the reasons given by the AO and dismissed the appeal filed by the assessee. 5. Before us, the Ld. counsel of the assessee files a Paper Book containing (i) Return of Income, Computation of total Income, Balance Sheet and Profit & Loss Account, (ii) Form No. 3CEB, (iii) Notice u/s 142(1) dated 02.06.2011, (iv) Letter dated 18.03.2013 addressed to Addl. CIT enclosing details of creditors, (a) PAN Card of Mr. Dilip Kikabhai Doshi (Archana Trader Prop.), (b) Confirmation of Ledger Account by Archana Trader, (c) Return of Income Acknowledgement, (d) Ledger of Archana Trader in Assessee’s books, (e) Bank Statement, (v) Letter dated 07.03.2013 addressed to Addl. CIT enclosing details of creditor, (a) Ledger of Archana Traders in our Books 01.04.2008 to 31.03.2008 & 01.04.2009 to 31.03.2011, (b) Invoices/Bills copies, (c) Bills/Invoice copies of Gemini Steel Tubes Ltd., (d) Ledger copies of Gemini Steel Tubes Ltd. 01.04.2007 to 31.03.2009 & 01.04.2008 to 31.03.2009, (e) Bank statement, (f) TIN Details and Annexures J2 of VAT showing tax payable by two parties, (6) Written submission before CIT(A).
M/s AVI Worldwide It is clarified by him that the documents at serial no. 1-5 were filed before the AO whereas at serial no. 1-6 were filed before the CIT(A). The Ld. counsel also files another Paper Book containing case laws.
On the other hand, the DR relies on the order of the Ld. CIT(A). He submits that as the assessee failed to produce the above two parties before the AO for verification of the purchases, the Ld. CIT(A) has rightly confirmed the addition of Rs.2,20,41,146/-.
We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We find that the notices issued by the AO u/s 133(6) on 07.01.2013 in the address given by the assessee were returned in four cases by the postal authorities with the remark unserved/not claimed. The AO asked the assessee to furnish fresh address of the above parties. Again he sent notices u/s 133(6) on 07.03.2013 in the new address given by the assessee. Out of four parties, the AO could not receive any reply as in one case the notice was not claimed and in the other case the notice was unserved. The assessee also submitted before the Ld. CIT(A) that the AO could have issued summon to the above two parties and then he could have given an opportunity to the assessee to cross-examine them. However, the AO failed to do so. We refer here to page 9 of the order of the Ld. CIT(A). The assessee has also taken it as a ground in this appeal. We are of the considered view that the contentious issues in the present appeal could be resolved by examining the above two parties.
M/s AVI Worldwide A proper hearing must always include a fair opportunity to those who are parties in the controversy for correcting or contradicting anything prejudicial to their view. Cross-examination is allowed by procedural rules and evidently also by the rules of natural justice. Any witness who has been sworn on behalf of any party is liable to be cross- examined on behalf of the other party to the proceedings. The Hon'ble Supreme Court in State of Kerala v. K.T. Shaduli Grocery Dealer AIR 1977 SC 1627, recognised the importance of oral evidence by holding that the opportunity to prove the correctness or completeness of the return necessarily carry with it the right to examine witnesses and that includes equally the right to cross-examine witnesses. In ITO v. M. Pirai Choodi (2012) 20 taxmann.com 733 (SC), the Hon'ble Supreme Court held that “Order of assessment passed without granting an opportunity to assessee to cross-examine, should not have been set aside by High Court; at most, High Court should have directed Assessing Officer to grant an opportunity to assessee to cross-examine concerned witness.” 7.1 In view of the above, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment after examining the above two parties and then giving opportunity to the assessee to cross-examine them. We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the assessment order.