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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI MANISH BORAD
आदेश/O R D E R
Per MANISH BORAD, A.M.:
This appeal is filed by the assessee against the appeal-order dated 13.02.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“Ld. CIT(A)”], which arises out of assessment-order dated 27.12.2017 passed by learned Dy. CIT, Circle 2(1), Indore, [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2008- 09. The assessee has taken the following grounds of appeal:
1. That the Ld. CIT(A) erred in confirming the addition of Rs. 30,00,000/- made by the AO even though the AO did not follow the instruction of Hon'ble ITAT of giving opportunity of cross examination to the assessee. The addition so confirmed being illegal and bad in law, the same may very kindly be deleted.
2. That the Ld. CIT(A) erred in passing a very vague and cryptic order by shifting onus of presenting the witness on to the assessee. The addition so Page 1 of 12
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 confirmed on the basis of wrong interpretation of law is illegal and wrong. The same may very kindly be deleted.
That the Ld. CIT(A) erred in maintaining the addition of Rs. 30,00,000/- made by the AO by not following judicial proprietary. The order of Ld. CIT(A) being illegal and wrong. The same may very kindly be quashed.
4. That even on merits also, the addition confirmed by Ld. CIT(A) is baseless and wrong. The same may very kindly be deleted.
Facts in brief as culled out from the record are that the assessee is an individual and engaged in the business of T. V. Cable Operator. The case of the assessee for A.Y.2008-09 was reopened by way of issuance of notice u/s 148 of the Act and thereafter assessment u/s 143(3)/147/254 of the Income-tax Act, 1961, was framed assessing the income at Rs. 35,07,800/-. In the said reassessment proceedings, addition of Rs. 30 lakhs was made towards unexplained investment allegedly made by the assessee by way of giving cash to Mr. Nilesh Ajmera for the purpose of purchasing immovable property. The said addition was made on the basis of the information received from the seized records found in the case of Nilesh Ajmera during the course of search and seizure operation of Satellite Groups and its group concern on 19.11.2009. The seized material included the diary B5-8, wherein certain details about payments in the mode of cash and cheque were found to have been made to Nilesh Ajmera alongwith some information about purchase of flat. The said details totalled to Rs. 80 lakhs of which Rs. 50 lakhs was through cheque and Rs. 30 lakhs was through cash alleged to have been received by Nilesh Ajmera from the assessee.
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 Based on this information since payments made through cheque were duly accounted for by the assessee, addition was made in the hands of the assessee for cash component. During the course of appellate proceedings, though the assessee denied to have given any cash to Nilesh Ajmera, but failed to get any relief from Ld. CIT(A). Thereafter the matter travelled to this Tribunal and vide order dated 1.12.2016, this Tribunal restored the matter to the Ld. AO for providing the opportunity to assessee to cross examine Mr. Nilesh Ajmera and thereafter decide the matter de novo. In compliance to the direction of this Tribunal, the ld. AO carried out the proceedings u/s 143(3)/147/254 ,of the Act, but the summons issued twice to Mr. Nilesh Ajmera remained unattended. The assessee also took an alternate plea before the ld. AO that on similar grounds, the Tribunal has deleted the addition made in the hands of Shri Pukhraj Soni, who was also alleged to have given advance to Shri Nilesh Ajmera, but in lack of any supporting documents and any information about any asset being acquired through such advances, additions were deleted. However, the ld. AO observed that since the decision of this Tribunal has been challenged before the Hon'ble Jurisdictional High Court and since Shri Nilesh Ajmera has not appeared before him for cross examination with the assessee, the addition of Rs. 30 lakhs for unexplained cash advance was again confirmed. Aggrieved the assessee preferred the appeal before the Ld. CIT(A), but failed to get any relief. Now the assessee is in appeal before this Tribunal.
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 3. The Ld. Counsel for the assessee vehemently argued referring to the detailed written submissions filed on 18.10.2023 and also referring to paper book containing 124 pages. He made two fold contentions – firstly stating that the alleged addition has been made on the basis of documents found and seized with the third persons and there being no corroborative and concrete evidence, which could prove that the assessee advanced the money to Nilesh Ajmera. Referring to the decision of this Tribunal in the case of ITO vs. Pukhraj Soni, in I.T.A.No. 585/Ind/2015 dated 21.09.2016, he submitted that the assessee deserves to succeed because in the case of Mr. Pukhraj Soni (supra) also and there was similar issue of addition made on account of advances made to Nilesh Ajmera and this Tribunal on finding that the ld. AO failed to bring on record any corroborative and concrete evidence against the assessee and that the addition made by the AO is merely based on suspicion, surmises and conjecture deleted the addition.
Reference was also made to other judgments and decisions laying down similar ratios and the same are mentioned in the written submissions.
Second fold of contention by Ld. Counsel for the assessee is that the assessee sought opportunity to cross examine Nilesh Ajmera, so as to prove that the assessee has not advanced alleged sum of Rs. 30 lakhs to Mr. Nilesh Ajmera and this opportunity was to be provided by the AO but the ld. AO casted the onus upon the assessee to bring Nilesh Ajmera for cross examination and since no such opportunity was granted, the alleged addition deserves to be deleted. Reliance placed on various decisions
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 including that of Hon'ble High Court of Delhi in the case of CIT vs. SMC Shares Brokers Limited, 74 CCH 0659 and in the case of CIT vs. S.D.Agrawal, 75 CCH 0314. While concluding his arguments, he also submitted that the Ld. AO has alleged that the disputed sum has been advanced by the assessee for the purpose of acquiring a flat in Dubai, but no evidence has been put forth by the Revenue Authorities to prove that whether any such investment has ever been made in the name of assessee for acquiring/purchasing flat at Dubai.
5. On the other hand, the Ld. Departmental Representative vehemently argued supporting the orders of the lower authorities and also stated that the assessee has himself not pressed the issue of cross- examination before the AO and has taken the alternate plea, taking support of the decision of this Tribunal in the case of Pukhraj Soni (supra).
We have considered the facts, rival submissions and perused the material available on record and the decisions relied upon by the Ld. Counsel for the assessee. The issue for our consideration is that Whether the Ld. CIT(A) erred in confirming the addition for unexplained investment in the form of cash of Rs. 30 lakhs allegedly given by assessee to Nilesh Ajmera. We observe that search and seizure operation was carried out in the case of Satellite Groups and its group concerns and Associates Companies including Mr. Nilesh Ajmera, Director of Phoenix Deora on 19.11.2009.
During the course of search at premises of Nilesh Ajmera, a diary BS-8 was found and seized. In this diary, some details of payments received from the Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 assessee Shri Rohit Seth was appearing. As per these details during financial year 2007-08, the assessee is alleged to have paid Rs. 80 lakhs to Nilesh Ajmera of which Rs. 50 lakhs is through cheque and Rs. 30 lakhs in cash and in the very seized documents below the details of payment, sum of Rs. 80 lakhs is indicated against the words R.Sethi in Dubai Flat. Based on these details appearing in the seized documents, case of the assessee was reopened and during the course of reassessment proceedings, the assessee admitted to have given Rs. 50 lakhs only to Nilesh Ajmera, but denied to have paid cash amount of Rs. 30 lakhs to Nilesh Ajmera and further denied to have made any investment in Dubai Flat. In the first round, when the assessee failed to get any relief from Ld. CIT(A), he filed the appeal before this Tribunal and after examining the facts of the case, this Tribunal vide its order dated 1.12.2016, restored the matter to the AO to decide the matter de novo after providing the opportunity to assessee to cross-examine Mr.Nilesh Ajmera. The relevant finding of this Tribunal following the ratio laid down by the Hon'ble Apex Court in the case of M/s. Andaman Timber Industries vs. Commissioner of Central Excise (Civil Appeal No. 4228 of 2006, order dated September 2, 2015), reads as follows : -
“7. We have heard rival contentions of both the parties and perused material available on record. Looking to the facts and circumstances, we find that the assessee disputed the correctness of the entries made in the diary and wanted to cross-examine Mr.Ajmera, but the AO did not grant this opportunity to the assessee. The Ld. CIT(A) confirmed the same on the ground that cross-examination is secondary evidence as the seized papers are primary evidence, therefore, there is no denial of natural justice if witnesses were not allowed to be cross-examined. However, we
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 are of the view that even when the assessee disputed the correctness of the entries made in the diary and wanted to cross- examine Mr.Ajmera and stated that he did not pay any amount in cash to Mr. Nilesh Ajmera against purchase of booking of any property, then the approach of the Revenue Authorities is not justified as it amounted to violation of principle of natural justice and because of which, the assessee was adversely affected. The ratio laid down by the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries vs. Commissioner of Central Excise (Civil Appeal No. 4228 of 2006, order dated September 2, 20215) supports our view. The relevant portion of the above order of the Hon'ble Supreme Court is reproduced hereunder :
“According to us, not allowing the assessee to cross- examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex- factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.”
Respectfully following the above order of the Hon'ble Supreme Court, we restore the present matter to the file of the AO, who will provide the opportunity to the assessee to cross- examine Mr. Ajmera and thereafter decide the matter de novo. The assessee is at liberty to file further submission/evidence, if Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 any, support of his claim. Accordingly, grounds of appeal of the assessee are allowed for statistical purposes only.”
7. From the perusal of the above finding of this Tribunal, we notice that after examining the facts of the case including the facts that details of payment by mode of cheque and cash was appearing in Diary BS-8, the matter has been restored to the ld. AO for deciding afresh after providing opportunity to assessee to cross-examine Nilesh Ajmera. So the fate of the addition was solely dependent on the outcome of the cross examination proceedings between assessee and Nilesh Ajmera. When the ld. AO carried out the proceedings in pursuance of directions of this Tribunal, the relevant observation of ld. AO appearing in the assessment order reads as under :-
“4. In response to said notices, Shri S.S.Solanki, CA and authorized representative of the assessee attended the assessment proceedings from time to time as per order sheet entries with whom the case was discussed. Written submission along with supporting documents were filed and placed on record. As per directions of Hon'ble ITAT, efforts were made to call for Shri Ajmera and get him cross examined by the assessee . Summons were issued to Shri Nilesh Ajmera twice but he did not attend office. The summons were served upon the gate-keeper in the residence of Shri Ajmera as he was not available at the residence. As per information, Shri Ajmera is absconding for last 2 years.
During the course of assessment proceedings, the AR of the assessee has not pressed upon the cross examination of Shri Ajmera but he has taken another plea that on similar ground the same bench of Hon'ble ITAT i.e. Indore Bench has decided the issue in favour of the assessee. The assessee has furnished copies of order passed by the Hon'ble ITAT bearing I.T.A.No. 585/Ind/2015 dated 21.09.2016 in the case of Shri Pukhraj Soni. It is gathered that the above order of the Hon'ble ITAT has not been accepted by the Department and the Department has preferred an appeal before the Hon'ble ITAT as discussed above has not got finality. Therefore, same is not applied in the case of the assessee.”
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 8. From perusal of the above observation of the AO, we notice that summons were issued to Nilesh Ajmera twice, but none attended and then the ld. AO has observed that the assessee has not pressed upon cross examination of Shri Ajmera. Further, we notice that when the issue travelled to Ld. CIT(A), he also confirmed the addition observing as under :-
“4.DECISION : I have considered appellant’s submissions. In this case, the appeal is directed against the order of the AO u/s 143(3)/147/254 of the Income-tax Act, 1961. Hon'ble ITAT vide order dated 01.12.2016 has set-aside the case and restored back to the file of AO to give opportunity to the appellant to cross examine Shri Nilesh Ajmera.
4.1 As per directions of Hon'ble ITAT, the AO made efforts to call Mr. Ajmera and get him cross examined by the appellant. Summonses were issued by the AO but he did not attend the office of the AO. The summonses were also served upon the gate- keeper in the residence of Mr. Ajmera, but he was not available at the residence. The AO has mentioned in the order that as per information, Shri Ajmera is absconding for last 2 years. Hence,addition of Rs. 30,00,000/- was made by the AO.
4.2 Before me, the written submission has been filed. It has been argued that the appellant cannot be punished because cross- examination could not be made. Hon'ble ITAT has clearly mentioned that the denial of cross-examination amounted to violation of principle of natural justice. It has been further mentioned by the AO in the order that the A.R. of the appellant did not press for cross-examination but relied upon some another judgement of Hon'ble ITAT in the case of Shri Pukhraj Soni.
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 4.3 Hence, as per material available before me, the directions of Hon'ble ITAT for cross-examination has not been complied. Appellant should have produced Shri Nilesh Ajmera for cross- examination. Since, no cross-examination of Shri Nilesh Ajmera has taken place as per the directions of Hon'ble ITAT, the addition made by the AO worth Rs. 30,00,000/- is confirmed and the appeal of the appellant is dismissed.
Now on going through the proceedings, and the relevant observations of the lower authorities, we find that the onus of bringing Nilesh Ajmera for cross examination has been casted upon the assessee. We fail to find any merit in such observation of the lower authorities for the reasons that the search and seizure action have been conducted by the Income Tax Department on Mr. Nilesh Ajmera and certain documents and diaries were seized. Based on such documents and also taking basis of statements given by Mr. Nilesh Ajmera, reassessment proceedings have been carried out in the case of the assessee. Admittedly, search action was conducted on the assessee and the alleged addition is merely on the basis of third parties’ information. So, when the additions have been made on the basis of documents found from the possession of Mr. Nilesh Ajmera and the search operations have been carried out in the case of Nilesh Ajmera, then as per the direction of this Tribunal, it was the responsibility and duty of the AO to bring Mr. Nilesh Ajmera for cross examination before the assessee and give him the opportunity to assessee to cross examine Mr. Nilesh Ajmera so as to adhere to the principles of natural justice, since the additions have been Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 made based on third parties’ statement. The burden to discharge the onus as directed by this Tribunal was purely on the AO and he could not absolve from his duty by mentioning that summons were sent twice to Mr. Nilesh Ajmera. The action of the AO seems like that there is a witness from the side of the Revenue and on his statement, the addition has been made in the hands of the affected party but when the opportunity of giving cross examination is to be given, then rather than the Revenue to bring its witness for cross examination the affected party is held responsible for bringing such witness. Similar approach of the Ld. AO in the instant case cannot be held to be justified. For the inability of the AO to comply with the directions of this Tribunal by not providing the opportunity to the assessee to cross- examine to Mr. Nilesh Ajmera leaves us with no option except to delete alleged addition for unexplained investment of cash given by the assessee to Mr. Nilesh Ajmera. Even the Ld. Departmental Representative could not place on record any other material in support of revenue to prove that any such investment was made in Dubai flat and also failed to controvert the findings of this Tribunal given in the case of Pukhraj Soni (supra), wherein also under similar set of facts and circumstances, relief was given to the assessee, since no corroborative and concrete evidence was found, which could prove that Mr. Pukhraj Soni has advanced money to Mr. Nilesh Ajmera. We, therefore, set-aside the finding of the Ld. CIT(A) and allow the effective ground nos. 1,2 & 3 raised by the assessee.
Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. Assessment year 2008-09 10. Ground No. 4 if of general nature which needs no adjudication. 11. In the result, the appeal is allowed.
Order pronounced in the open court on 10.01.2024.