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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner (Appeals) – 32, Mumbai and arises out of the order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).
The grounds of appeal filed by the assessee read as under:
i. The Learned Commissioner of Income Tax (Appeals) – 32 has erred in law in confirming the addition made by the Assessing Officer of Rs. 30,00,000/- as a undisclosed income of the assessee which most unjustified and arbitrary. ii. The Learned Commissioner of Income Tax (Appeals) – 32 has erred in law in applying Section 44AF which is not applicable to the case of the assessee. iii. The order of the Commissioner of Income Tax (Appeals) – 32 is bad in law and unjustified.
Briefly stated, the assessee filed his return of income for the A.Y. 2006-07 on 25.06.2006 showing total income of Rs.76,850/-. The Assessing Officer (AO) had received information from the Directorate of Enforcement vide letter dated 06.04.2010 that on 13.10.2005 at Valiyapattanam Railway station an amount of Rs. 30 lacs was robbed from one Shri M.T. Umer during his journey from Mumbai to Calicut and the said amount was stated to be entrusted to him by the assessee. During the course of assessment proceedings, the AO asked the assessee to submit the source of Rs. 30 lacs. In response to it, the assessee submitted the details of 40 Visa aspirants from whom the alleged cash was received by the assessee. Then the AO issued notice u/s 133(6) to the 40 Visa aspirants and the position is narrated in the assessment order which is produced as under:-
SL NO NAME REMARKS 1 THERAVIL GIRISH REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 2 REJIS BABU VADAKKETHODI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 3 DEVIDASAN VELU REPLY AWAITED KOLOTHUMTODI 4 MORDU KOLKAT REPLY AWAITED DELIVERED ON 05.11.13 5 SARAFUDDEEN DAPPIL REPLY AWAITED MOHIMMED 6 BHILASH CHIRAKKAL RETURNED UNDELIVERED BALAKRISHNAN 7 RAJAN THENESSERY REPLY AWAITED 8 SHAJIMON THATTADI REPLY AWAITED PARAMBIL 9 MUHAMMED ASHRAF REPLY AWAITED ARIMBRA 10 PALLATHODI MOHAMMED RETURNED UNDELIVERED IQBAL
1 MUJEEB CHEKU HASSAN REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 12 MUHAMMED KUTTY REPLY AWAITED ADATTHTHODI 13 ABBAS THACHAMKUNNAN REPLY AWAITED 14 MANOJ KRISHNAN REPLIED THAT HE HAS NO DEALINGS WITH ALLAKKATT ASSESSEE 15 ABOBAKKAR SIDHIQU REPLIED THAT HE HAS NO DEALINGS WITH ALAKKAL ASSESSEE 16 MUHAMED MUSHAFA AKKA RETURNED UNDELIVERED PARAMBIL 17 ABDUL JALEEL REPLY AWAITED MANIKKANTHODI 18 UBAIDULLA VALIYATHODI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 19 MUNEER KUNNATH REPLY AWAITED 20 MOHD ABDULJALAL REPLY AWAITED VALIYATHODI 21 MUTHANGAPPAR AMBIL NOTICE UNDELIVERED SASIDARAN 22 ORATHODY MUHAMMED REPLY AWAITED SAJEER 23 RIYAS BABU KODUVAND REPLY AWAITED 24 HANEEFA RAWTHAR REPLY AWAITED SAAHULHAMEED 25 PULIYAKKATTIL SIDHEEQUE REPLY AWAITED DELIVERED ON 18.11.13 26 MELEVEETIL SAMEERALI REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 27 SIHABUDDEN VILAKKATHODI REPLY AWAITED 28 MAHESH POTHUVAKKUTH REPLY AWAITED 29 MADATHODI UMAR REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 30 MUNDAKKAL CHANGARU REPLIED VIDE LETTER DATED 27.11.2013 THAT HE HAS PAID Rs. 75,000/- IN CASH FOR AIR TICKET & VISA TO BABULAL JAIN 31 KUTTERI ABDUL NASIF REPLY AWAITED DELIVERED ON 19.11.13 32 THONDIYIL JAYAFAR SADK REPLIED VIDE LETTER DTD 21.11.13 THAT HE HAD PAID Rs. 75,000/- TO MR. HAMSA BY CASH AND WAS NOT AWARE TO WHOM THE AMOUNT WAS ENTRUSTED FOR PURCHASING AIR TICKET 33 ANVER MEKKADANKUZHI REPLY AWAITED 34 SHOWKATH ALI REPLY AWAITED THOTTAKKARA 35 THETTAYIL JOSEPH NOTICE UNDELIVERED 36 PONNAK AMPAT VINODAN REPLY AWAITED 37 MUHAMMED JALEEL REPLY AWAITED DELIVERED ON 17.11.13 38 KARIVILK AKKAPRATH REPLY AWAITED 39 KUNNATH DILEEP REPLIED THAT HE HAS NO DEALINGS WITH ASSESSEE 40 AYOOB AMBALAAPARAMBAN RETURNED UNDELIVERED The AO, on examination of the above observed that only one person at Sr. No. 30 that is Mr. Mundakkal Changaru vide letter dated 27.11.2013 confirmed the payment of Rs.75,000/- to the assessee. Mr. Thondiyil Jayafar Sadk vide letter dated 21.11.2013 has replied that he has paid Rs.75,000/- to one person, named Mr. Hamsa by cash and he was not aware to whom the amount was entrusted for purchasing air ticket. In response to a query raised by the AO, the assessee filed a reply dated 14.02.2014 which is at Page 4 of the assessment order. The AO was not convinced with the same as the assessee failed to discharge the burden of proving the genuineness of transaction with the parties. Therefore, he made an addition of Rs.29,25,000/- to the income shown by the assessee.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that (i) 8 out of the 40 persons denied having any relation with the appellant, while in 7 cases, the notices could not be delivered. In rest of the cases, there was no response except for one person who confirmed that he had paid Rs.75,000/- to the appellant for carrying on work for obtaining Visa and Air ticket, (ii) the assessee has filed return of income u/s 44AF who is applicable to assessee engaged in retail trade of any goods or merchandise, (iii) admittedly, the assessee has made a claim to the cash claimed to have been stolen from the possession of one M.T. Umer, vide Cr MC No. 609 of 2011. Therein the assessee has claimed ownership of cash. In that petition, the assessee has requested the Court to quash the criminal proceedings against the accused in the theft case. The Hon'ble High Court refused to accept the petition and dismissed the same.
The Ld. CIT(A) noted that during the appellate proceedings before him, nothing more in the matter was produced or argued. As regards the alternate plea of the assessee that the cash having been lost in theft, has to be allowed as deduction, the Ld. CIT(A) found that the case laws cited by the assessee apply to cases where cash having been lost in theft, has to be allowed as deduction. All the case laws cited by the assessee apply to cases where either cash itself is the stock in trade or cash transactions form integral part of the business of the assessee. The assessee is in the retail trade of goods and merchandise. Therefore, the Ld. CIT(A) confirmed the addition of Rs.29,25,000/- made by the AO.
Before us, The Ld. Counsel for the assessee filed a copy of the documents filed by the assessee on 16.06.2015 before the Ld. CIT(A).
Per contra, the Ld. DR relied on the order passed by the Ld. CIT(A).
We have heard the rival submission and perused the relevant material on record. The Hon’ble Supreme Court in State of Kerala vs. 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 vs. M. Pirai Choodi [2012] 20 taxmann.com 733 (SC), the Hon'ble Supreme Court held:-
In this case, the High Court has set aside the order of assessment on the ground that no opportunity to cross-examine was granted, as sought by the assessee. We are of the view that the High Court should not have set aside the entire assessment order. At the highest, the High Court should have directed the Assessing Officer to grant an opportunity to the assessee to cross-examine the concerned witness.
7.1 In view of the above, the order of the Ld. CIT(A) is set aside and the AO is directed to pass an assessment order afresh as per the provisions of the Act, after giving opportunity of being heard to the assessee to cross-examine a reasonable number of the concerned parties. The assessee is directed to file before the AO the relevant details.
In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open court on 19.04.2017