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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI A.K. GARODIA
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred against the order of the CIT(Appeals)-V, Bangalore dated 24.11.2013 for the assessment year 2009-10 inter alia on the following grounds:-
The order of the AO is against the facts and circumstances of the case and arbitrary against the principle of natural justice.
2. Whether on the facts and circumstances of the case, the action of the AO is justified in making addition of Rs. 77,56,000/- as unexplained credit though the documentary evidences were produced.
3. On the facts and circumstances of the case, the Hon'ble CIT (A) erred in enhancing the income by Rs. 75,00,000/-, though the credit were made in appellant's bank account through proper banking channel and by ignoring the appellant plea of verifying the creditors by calling them by issuing the summons u/s 131. 4. The authorities below were erred in appreciating the facts in proper prospective manner and without making further verification on request of the appellant. 5. For these and other reasons which may be adduced at the time of hearing, the appellant prays before this Hon'ble Bench to delete the addition made by the AO as well as CIT (A) or such other order which the Hon'ble bench may deem fit. 6. Appellant Craves Leaves to add, to alter, to amend or to delete any other ground during the course of hearing.
During the course of hearing, the ld. counsel for the assessee has raised the additional grounds which are as under:-
7. On the facts and circumstances and under the provisions of the law, the A.O & CIT(A) erred in making and sustaining the addition u/s 68 for the credits in the Bank Pass Book not in the Books of Accounts, for the relevant financial year the appellant has not maintained the Books of Accounts as there is no income for the appellant during the said financial year.
8. On the facts and circumstances and under the provisions of the law, the authorities below erred in appreciating the fact of the case that the amount credited in the Pass Book contributed by the persons who are signatory to Memorandum of Understanding entered on 01-08-2008.
During the course of hearing, our attention was invited to the order of the lower authorities with the submission that a substantial cash deposit of Rs.77,56,000 was found in the assessee’s bank account. In order to verify the source of deposits in the assessee’s bank account, a show cause notice was issued to the assessee and in response thereto, it was explained that the assessee has entered into MoU with Shri P.S. Gururaj and Shri S. Anand Setty and through this MoU, the assessee has received Rs.2.5 crores from the other party, out of which cash was deposited in the bank account. During the course of assessment proceedings, the AO made enquiry from Shri P.S. Gururaj, who in response thereto has denied having given any money in cash to the assessee during the previous year relevant to A.Y. 2009-10. His letter was confronted to the assessee and assessee in response thereto, has requested the AO to summon Shri Gururaj u/s. 131 of the Act, but the AO has not summoned Shri Gururaj and has not allowed any opportunity to cross-examine Shri Gururaj. The ld. counsel for the assessee has contended that since the AO has taken cognizance of the letter of Shri Gururaj without allowing the assessee to cross-examine Shri Gururaj, the addition made thereon is not sustainable in the eyes of law.
The ld. counsel for the assessee has further contended that it is settled position of law that wherever the AO intends to take cognizance of any evidence against the assessee, that evidence should be confronted to him and the assessee should be allowed to cross-examine that person if he expresses desire. In support of this proposition of law, he placed reliance upon the judgment of Hon’ble Supreme Court in the case of Manoharan v.
Sivarajan & Ors., Civil Appeal No.10581 of 2013.
The ld. DR, on the other hand, has contended that the AO has confronted the information received from Shri Gururaj to the assessee, therefore, now the assessee cannot question the veracity of the letter.
Having carefully examined the orders of lower authorities, we find that undisputedly certain huge amount of cash was deposited in the bank account of the assessee and in order to explain the deposits, the assessee has taken shelter that it was deposited out of the cash received through MoU. The AO has made enquiry from Shri Gururaj, who has denied having given any cash amount to the assessee. It is also evident from the record that the assessee has written to the Assessing Officer to summon Shri Gururaj and allow the assessee to cross-examine him, but the AO did not allow the assessee to cross-examine Shri Gururaj by summoning him. It is settled proposition of law that whenever the AO intends to take adverse view against the assessee on the basis of any evidence, he is required to confront the same to the assessee and if the assessee desires, he may allow the assessee to cross-examine the witnesses. In the light of this legal proposition, we are of the view that the AO has wrongly taken cognizance of the letter written by Shri Gururaj, without affording the assessee an opportunity to cross-examine him. We accordingly set aside the order of the CIT(Appeals) and restore the matter to the Assessing Officer with a direction to readjudicate the issue afresh and allow the assessee an opportunity to cross-examine Shri P.S. Gururaj so that truth may come out.
So far as the additional grounds are concerned, we are of the view that whenever cash deposits are found in the bank account, addition can be made u/s. 69, if not u/s. 68 of the Act. In any case, since we have restored the matter back to the AO, this aspect may also be examined by the AO.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 5th day of August, 2016.