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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the assessee against the order of CIT(A)-1 & 2, Kolhapur, dated 14-01-2015 for the Assessment Year 2006-07.
Assessee raised 8 grounds in the appeal memo originally. Subsequently, assessee filed the concise grounds and the same are extracted as under :
“1. Lower authorities have erred in adding Rs.1,02,25,000/- to returned income of Rs.99,265/-. Appellant prays to delete the additions. 2. Appellant prays for fair and equitable relief. 3. Appellant prays for cancellation of interest levied under section 234B.
Apart from various sets of paper books, assessee also furnished
supplementary documents by way of an affidavit. Further, Ld. Counsel for
the assessee also filed copies of documents from the records of the AO on
25-06-2016 and prayed for admission of the same. Further, assessee filed
paper book on 04-01-2018 containing additional evidences along with
prayer for admission of the same.
With the above background facts, before us, Ld. Counsel for the
assessee brought our attention to the facts of the case and mentioned that
the assessee is a salaried employee of M/s. Athani Farmers Sugar Factory
Ltd., located in Belgaum. There was survey action u/s.133A of the Act on
18-01-2012 on the said company. The survey action resulted in the
discovery of a Blue Diary for the year 2005 in the possession of the
assessee. Assessee is a Manager in the Material Department of the
company. On perusal, the diary is found to contain certain incriminating
information relating to kick backs for the F.Y. 2005-06 to 2008-09. The
said information was supplied to the AO of the assessee. The AO of the
assessee received about the said information from the Belgaum and the
total kick backs were computed to work out to a sum of Rs.1,02,25,000/-
for the F.Y. 2005-06 relevant to A.Y. 2006-07. Basing on the said
information, the AO, Kolhapur initiated the proceedings u/s.147 of the Act
after due recording of the reasons as well as after obtaining the approval of
the Addl.CIT, Kolhapur. During the survey action, the statement was
recorded on oath from the assessee. In the said statement, assessee not
only confirmed the contents of said diary but also offered the said sum of
Rs.1,02,25,000/- as additional income of the assessee for the year under
consideration. He also confirmed in answer to Question No.9 that he
voluntarily declared the said sum. Subsequently, assessee filed an affidavit
dated 30-01-2012 retracting the above said additional income/statement in
toto on the ground that the said admission was given due to pressure from
the Management. AO extracted the contents of said affidavit in Para No.4.2
of the assessment order. Rejecting the contents of the affidavit, AO made
out a case that the diary, with the name of the assessee embossed on it,
belongs to the assessee and the contents relating to the kick backs are in
the knowledge of the assessee. Assessee is a highly qualified commerce
graduate and therefore, the statement given by him is in the knowledge of
the assessee. For the following reasons, the AO assessed the sum of
Rs.1,02,25,000/- as income of the assessee. The relevant lines from the
contents of Para 5.3 of the assessment order are extracted here as under :
“5.3 . . . . . . . . . . . . .In view of these facts, affidavit etc. and the story of pressure from management is sheer an afterthought to avoid to pay legitimate taxes due. Considering these facts, it is unfair on the part of the assessee that kick back money directly went to management of factory, because, the Chairman-responsible person in management in his recorded statement stated that he is unaware of transaction mentioned in the diary by Shri Namdeo Patil-present assessee and also not aware under what circumstances he maintained and kept that diary. In view of the facts and circumstances of the case discussed hereinbefore, a sum of Rs.1,02,25,000/- on account of kick back money received by the assessee is added back to the total income of the assessee under the head “income from other sources”, simultaneously, penal proceedings u/s.271(1)(c) of the Act, for concealment of income of Rs.1,02,25,000/-, as well as, furnishing particulars of such income are initiated, separately.”
During the First Appellate proceedings, the assessee reiterated the
arguments made out before the AO in the reassessment proceedings. At
the end of the First Appellate proceedings, the CIT(A) not only rejected the
retraction of the assessee as the same is not supported by any evidences
but also confirmed the addition made by the AO.
Aggrieved with the same, the assessee is in appeal before us with the
concise grounds extracted above.
At the outset, Ld. Counsel for the assessee brought our attention to
the fact that the AO did not share the copies of the statements as well as
the contents of the diary with the assessee before the addition is made by
the AO. Further, he submitted that despite the demand for cross
examination, assessee was denied of the same by the authorities. Bringing
our attention to the additional evidences placed at page 123 onwards of the
paper book, Ld. Counsel submitted that the assessee invoked the
provisions of Right to Information Act, 2005 and obtained various papers
and documents which are listed in Para No.2 of the said page 123. The list
consists of statement of Chairman and Employees recorded on 27-04-2012,
assessment order of M/s. Athani Sugars Ltd. for A.Y. 2006-07, statement of
the assessee recorded on 24-03-2014, Affidavit of Bharat Narayan Patil,
dated 27-04-2012, statement of the assessee recorded on 26-04-2012 etc.
Ld. Counsel further submitted that all the above said documents were
obtained after passing of the assessment/re-assessment/First Appellate
orders in the month of September, 2016 and these documents go to the
root of the matter. Therefore, Ld. DR for the Revenue submitted that these
documents may be admitted and remanded to the file of AO for fresh
examination of the entire issues considering the set principles of natural
justice. Further, he also brought our attention to the copy of FIR dated 12-
05-2012 and copy of the charge-sheet dated 16-04-2016 filed by the
company against the assessee. Ld. Counsel submitted that the company
has named 13 suppliers and alleged that assessee pocketed extra discount
from the suppliers. Making various submissions in the written note
“Sequence of Events and Facts” and deviating from the demand for
cancellation of reassessment order, Ld. Counsel for the assessee submitted
that the additional evidences may be admitted and remand all the issues to
the file of AO for fresh examination and grant of cross-examination, if any,
as per the set principles of natural justice.
On the other hand, Ld. DR for the Revenue, on the preliminary issue
of admission of additional evidences and granting of cross-examination with
the Management/Employees of the company relied on the orders of the AO
and the CIT(A) and the incriminating material discovered by the survey
team.
On the preliminary issue of admitting the additional evidences, we
heard both the parties and perused the additional evidences placed before
us. It is an admitted fact that assessee gave a statement on oath during
the survey action giving disclosure of Rs.1,02,25,000/- for the assessment
year under consideration. Further, it is also an admitted fact that there are
various other statements recorded by the survey team involving the
Management and the Employees of the company. The details pertaining to
the FIR and the charge-sheet were also placed before us. Further, it is
undisputed fact that the benefit of cross-examination was not granted to
the assessee while making the addition of Rs.1,02,25,000/- for the year
under consideration. As such, the information gathered by the assessee
under the provisions of Right to Information Act, 2005 are anterior to the
passing of the orders by the AO and the CIT(A). We also find, admission of
these additional evidences will be helpful for administration of justice.
Therefore, we are of the opinion that the said additional evidences
should be admitted. Further, considering the principles of natural justice,
we find the said documents should be referred to the file of AO for use of
the same after granting reasonable opportunity of being heard to the
assessee. It is the requirement of jurisprudence that wherever required the
benefit of cross-examination has to be granted to the assessee. With these
directions and observations, we are of the view that these additional
evidences are admitted and remanded.
Coming to the issues raised on merits, we are of the view that the
issues raised in the grounds should also be remanded to the file of AO for
fresh evidences and pass a speaking order on each of the arguments raised
by the assessee before us. Accordingly, the prayer regarding admission of
additional evidences is allowed and the concise grounds raised by the
assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical
purposes.
Order pronounced on this 27th day of March, 2018.
Sd/- Sd/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 27th March, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-1 & 2, Kolhapur 3. आयकर आयु� / The CIT-1 & 2, Kolhapur 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “ए” / 5. DR ‘A’, ITAT, Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune