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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2”, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER ORDER ORDER ORDER
PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM
This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-27, New Delhi dated 30.12.2015 pertaining to assessment year 2012-13 on the following grounds:-
1. That the order of the Id. CIT (A) is bad on facts and in law.
2. That the Id. CIT (A) has erred in adding a sum of Rs.37,12,500/- in the hands of the appellant as commission income arising out of the certain undisclosed
activities.
3. That the Id. CIT (A) has erred in confirming the above said addition based on surmises, presumptions
and conjectures.
4. That the Id. CIT (A) has erred in confirming the addition by incorrectly stating that the appellant did not deny the bogus transactions between VSPL and its 13
share applicant companies.
5. (a) That Id. CIT (A) has erred in law In confirming the addition
purportedly on the basis of a statement by a third party.
(b) That no copy of the statement of the third party was given to the appellant.
(c) That no right to cross examine the third party was given to the appellant.
(d) That the Id. CIT (A) has erred in not appreciating the fact that the statement taken during survey does not have any evidentiary value and has no credibility in the eyes of law.
(e) That the Id. CIT (A) has passed the appellate order without application of mind as in the last line at page 12 of her order, she has clearly stated that the addition of RS.24.78 crores is upheld and confirmed. The appellant fails to understand the relevance of this amount especially when the commission of Rs.37,12,500/- has been added.
6. The appellant craves leave to add, alter, amend,
delete and substitute any or all the grounds of appeal before or at the time of hearing.
The brief facts of the case are that the assessee is a individual and is a Chartered Accountant in practice and by qualification and profession. The assessee filed its return of income u/s. 139(1) electronically on 22.3.2013 declaring an income of Rs. 9,07,636/-.
Notice u/s. 143(2) & 142(1) of the I.T. Act, 1961 were issued and the proceedings were taken up, to which the assessee himself attended from time to time and filed the necessary details and documents required. The AO assessed the total income of the at an income of Rs. 46,20,140/- vide his order dated 25.3.2015 u/s. 143(3) of the I.T. Act, 1961.
Aggrieved with the action of the Assessing Officer, Assessee filed the Appeal before the Ld. CIT(A), who vide his impugned order dated 30.12.2015 dismissed the Appeal of the Assessee by upholding the assessment order passed by the AO.
Against the Ld. CIT(A)’s order dated 30.12.2015, now the assessee is in Appeal before the Tribunal.
At the time of hearing, Ld. Counsel of the Assessee stated that assessee is a Chartered Accountant and practicing as a C.A. and filed its return of income u/s. 139(1) of the I.T. Act, 1961 electronically on 22.2.2013 declaring income of Rs. 9,07,136/- after adopting the prescribed procedure under the law. The AO assessed the total income of the assessee at an income of Rs. 46,20,140/-.
He stated that the AO has made the addition on account of commission out of accommodation business activities amounting to Rs. 37,12,2500/-. He further stated that a Survey u/s. 133A of the Act was conducted on 17.10.2012 at the premises of one of the client of the assessee M/s Varrenyam Securities Pvt. Ltd. At its registered office at 2442, 1st floor, Gali No. 10, Karol Bagh, New Delhi – 110 005. Since the assessee is also having his office in the same premises and the Survey on the assessee were also conducted by the Department. In pursuance to the search conducted Mr. Himanshu Verma was examined by the Investigating Authority on 14.4.2012 and in his statement he admitted that various Chartered Accountant acted as middlemen for commission and a list of 13 Chartered Accountant was given in which the name of the assessee was appearing against Serial No. 10 alongwith his mobile number.
On the basis of the statement of Sh. Himanshu Verma that in the absence of any evidence the AO made the addition on account of commission for providing accommodation entries @ 0.15% of Rs. 2.47 crores computed at Rs. 37,12,500/- and made the addition oin the case of the assessee. Ld. Counsel of the assessee further stated that merely on the basis of the statement of Sh. Himanshu Verma the addition in dispute has been made in the hands of the assessee which is contrary to the various decisions rendered by the Hon’ble Supreme Court of India, Hon’ble High Court and the Tribunals. He further stated that the Revenue Authority has not provided any statement of Sh. Himanshu Verma recorded during Survey to the assessee and no opportunity of cross examination has been given to the assessee which is not sustainable in the eyes of law. In support of his contention, he cited the decision of the Hon’ble Supreme Court of India in the case of Krishinchand Chellaram vs. CIT 1980 19 CTR (SC; 360 (1980) 125 ITR 713 (SC); Hon’ble Rajasthan High Court in the case of CIT vs. AL Lalpuria Om 384 (Rajasthan); Shalimar Buildcon (P) Ltd. Vs. Mo (2011) 1 ITD 396 (JP); Hon’ble Delhi High Court decision in the case of CIT vs. Girish Chaudhar (2007) 163 Taxman 608 (Delhi). In view of the above, he stated that the addition in dispute made by the AO and wrongly confirmed by the Ld. CIT(A) may be upheld without any basis which deserve to be deleted.
On the contrary, Ld. Departmental Representative has relied upon the orders of the authorities below and stated that the same may be upheld and the appeal of the Assessee may be dismissed accordingly.
I have heard both the parties and perused the records, especially the orders of the revenue authorities, case laws cited by the Ld. Counsel of the assessee. I find that the AO assessed the total income of the assessee at an income of Rs. 46,20,140/-. The AO has made the addition on account of commission out of accommodation business activities amounting to Rs. 37,12,2500/-. A Survey u/s. 133A of the Act was conducted on 17.10.2012 at the premises of one of the client of the assessee M/s Varrenyam Securities Pvt. Ltd. At its registered office at 2442, 1st floor, Gali No. 10, Karol Bagh, New Delhi – 110 005. Since the assessee is also having his office in the same premises and the Survey on the assessee were also conducted by the Department. In pursuance to the search conducted Mr. Himanshu Verma was examined by the Investigating Authority on 14.4.2012 and in his statement he admitted that various Chartered Accountant acted as middlemen for commission and a list of 13 Chartered Accountant was given in which the name of the assessee was appearing against Serial No. 10 alongwith his mobile number. On the basis of the statement of 6 Sh. Himanshu Verma that in the absence of any evidence the AO made the addition on account of commission for providing accommodation entries @ 0.15% of Rs. 2.47 crores computed at Rs. 37,12,500/- and made the addition in the case of the assessee. I find considerable cogency in the contention of the Ld. Counsel of the assessee that merely on the basis of the statement of Sh. Himanshu Verma the addition in dispute has been made in the hands of the assessee which is contrary to the various decisions rendered by the Hon’ble Supreme Court of India, Hon’ble High Court and the Tribunals. I also find that Revenue Authority has not provided any statement of Sh. Himanshu Verma recorded during Survey to the assessee and no opportunity of cross examination has been given to the assessee which is not sustainable in the eyes of law, in view of the Hon’ble Supreme Court decision in the case of Kishinchand Chellaram vs. CIT (1980) 125 ITR 713 (SC) wherein it has been held that evidence collected at the back of the assessee has to be confronted to the assessee to give him opportunity to rebut the evidence, otherwise, same is not admissible.
I further draw my support from the Hon’ble Supreme Court of India decision in the case of Andaman Timber Industries vs. Commissioner of Central Excise reported in (2015) 94 CCH 0187 (SC) wherein the assessee is entitled for cross examine the witness. I note that the Hon’ble Apex Court concluded that not allowing assessee to cross-examine, amounting to serious flaw which make impugned order nullity and violation of principles of natural justice.
In the background of the aforesaid discussions and respectfully following the precedents of the Hon’ble Supreme Court as aforesaid, I am of the considered opinion that the addition made on the basis of the statement collected at the back of the assessee and the right of cross examination was not provided to him, hence, I delete the addition in dispute made by the AO and confirmed by the Ld. CIT(A) and accordingly, allow the Appeal of the Assessee.
In the result, the Appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 19/10/2016.