SHRI ROHIT SETHI,INDORE vs. THE DCIT 2(1), INDORE

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:

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 Assessment year 2008-09 confirmed on the basis of wrong interpretation of law is illegal and wrong. The same may very kindly be deleted.

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.

Page 2 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

Page 3 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

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

Page 4 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

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).

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

Page 5 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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

Page 6 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.”

Page 7 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 Assessment year 2008-09 any, support of his claim. Accordingly, grounds of appeal of the assessee are allowed for statistical purposes only.”

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.

Page 8 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

Page 9 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

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

Page 10 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

Page 11 of 12

Shri Rohit Sethi, Indore vs. DCIT,2(1), Indore. ITA No.118/Ind/2023 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.

Sd/- Sd/- (VIJAY PAL RAO) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore िदनांक/Dated : 10.01.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY

Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

Page 12 of 12