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Income Tax Appellate Tribunal, “SMC - A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
Date of hearing : 15.05.2017 Date of Pronouncement : 19.05.2017 O R D E R
This appeal is preferred by the assessee against the order of CIT(Appeals) inter alia on the following grounds:-
“1. The Learned Assessing officer had erred in passing the order in the manner passed by him and the learned CIT(A) has erred in confirming the same. The orders as passed are bad in law and are liable to be quashed. 2. The impugned order as passed by the Assessing Officer was without jurisdiction and also passed violating the principles and natural justice and therefore it is bad in law and nonest in law is required to be quashed.
3. In any case and without prejudice the condition precedent for issue of notice U/s. 148 of the Act being not present all the consequential proceedings become bad in law and are liable to be quashed. 4.1. In any case without prejudice, the learned Assessing Officer had erred in not accepting the gain on sale of shares as gain on sale of Capital Asset (Short Term) despite the overwhelming evidence and proof, is against law and facts is to be rejected. The claim of the appellant of Short Term Capital Gain being right in law and on facts is to be accepted 4.2. The learned Assessing Officer had erred in treating a sum of Rs. 2,13,926/- as income from other sources, on the ground that the transaction in shares are not genuine. The action of Assessing Officer being contrary to both facts and law is to be rejected. 4.3. The learned Assessing Officer had erred 'in not appreciating the facts and evidence available. The conclusions drawn by Assessing Officer are without any basis, based on surmises and conjectures are to be disregarded. 5. The learned Commissioner of Income Tax (Appeals) has erred in dismissing the appeal in limine on the ground that the appeal was not prosecuted by the appellant. The appellant has not been received any hearing notice, could not have attended the hearing. Therefore, the impugned order passed by the CIT(A) is bad in law and liable to be quashed. 6. The appellant denies the liability to pay Interest U/s. 234B and 234C of the LT. Act. 1961. The Interest having been levied erroneously is to be deleted. 7. In view of the above, and on other grounds to be adduced at the time of hearing it is requested that the order passed by the authorities below be quashed or atleast the addition made to be deleted and the interest levied be also deleted.”
During the course of hearing, the ld. counsel for the assessee has invited our attention to the assessment order with the submission that search was conducted in a group of Shri Mukesh Choksi and on the basis of the statement of Mukesh Choksi, the AO has treated the share transactions entered upon by the assessee as bogus and made the addition of the same in the hands of the assessee.
The ld. counsel for the assessee further contended during the course of assessment proceedings assessee has asked for opportunity to cross-examine Shri Mukesh Choksi, whose statement is being relied upon for making the addition in the hands of assessee; but the assessee has not been afforded opportunity to cross-examine him. Rather, statement of Mukesh Choksi recorded during the course of his own assessment was also not confronted to the assessee. Therefore, the additions made in the hands of assessee are not sustainable in the eyes of law.
The ld. DR, on the other hand, has placed reliance upon the order of CIT(Appeals).
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.
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 19th day of May, 2017.