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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-II’ NEW DELHI
Before: SMT DIVA SINGH
Date of Hearing 03.08.2016 Date of Pronouncement 30.09.2016 ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 02.06.2015 of CIT(A)-22, New Delhi pertaining to 2008-09 assessment year on various grounds. However, at the time of hearing, the Ld. AR submitted that the appeal of the assessee may be allowed in view of the fact that the opportunity to cross-examine the person whose statement was relied upon by the Revenue was not provided to the assessee.
On account of this lapse, it was his submission that the assessment be quashed. The said prayer of the assessee was opposed by the Ld. Sr.DR.
The record shows that the assessee declared an income of Rs.2,10,550/- which was processed under section 143(1) and subsequently by issuance of notice under section 148 following show cause notice is shown to have been issued to the assessee:-
"From the various submissions made by you, it is gathered that you have made purchases of Rs.11,91,717/- from M/s Pashupati Enterprises and of Rs.16,89,879/-from M/s A.G. Overseas during the F.Y. 2007-08. In this connection it is informed that I have information that no sales have been made by these concerns to you and these are only accommodation entries. You are Page 1 of 4
I.T.A .No.-4882/Del/2015 requested to explain why these entries may not be added to your income. Your reply in this connection should be received in this by 24.01.2014. Further, in your letter dated 1.10.2013 you have requested to provide copy of statement issued by the partners of M/s Pashupati Enterprises and M/s A.G. Overseas. In this connection it is informed that copy of statement given by Sh. Rakesh Gupta dated 12.02.2013 is available in this office with the undersigned. If you want to examine the statement, you may do so on the date as mentioned above i.e. 24.01.2014."
The assessee in response thereto as per the assessment order sought a copy of the statement recorded by the Investigation Wing. It was submitted on behalf of the assessee as per letter dated 30.01.2014 that Sh. Rakesh Gupta has admitted that only in 5% of the cases the business was genuine and the bills given to his clients in the names of various concerns floated by him to the extent of 95% were only accommodation entries wherein only after receiving commission in lieu of this accommodation the bills were provided. For the same, VAT was charged on all the bills issued to the clients and in the case of the assessee also such VAT has been duly charged. The Assessing Officer is found to have required the assessee to demonstrate whether any goods have been transported to the assessee by way of transportation bills, entries in stock registers (if it is maintained) and to whom and when these goods allegedly purchased from these two parties were sold and how the payment was received as this enquiry would support the assertion of the assessee that the assessee’s purchase was genuine. However, since the assessee failed to produce any supporting evidence the purchases from the two parties M/s Pashupati Enterprises and M/s AG Overseas were held to be bogus resulting in the addition of Rs.28,81,596/-.
In appeal before the First Appellate authority, the addition was confirmed holding that the assessee has not been able to provide any evidence by way of supporting evidences like transportation bills, entries in stock register and other details to establish that these were genuine purchases made from the parties. Further relying on the fact that as per note sheet dated 03.01.2014 notice issued under section 133 (6) to M/s AG Overseas and Page 2 of 4
I.T.A .No.-4882/Del/2015 M/s Pashupati Enterprises had returned unserved and the assessee failed to offer any explanation why the notice returned unserved. The addition was sustained. The relevant extract from the impugned order is reproduced hereunder:- c) “The crucial issue which needs to be considered is that since the matter relates to entry operator, the appellant should have provided concrete evidence in term of challans of transporter or other documents to prove the actual delivery of purchased items. Further, during the assessment proceedings also despite large number of hearings, the appellant could not establish the genuineness of these transactions with the two parties. Even the notices sent to these parties had been returned which also corroborate the observations of the AO that the purchases were not genuine.”
Both the parties have been heard. Considering the prayer and the facts on record, I am of the view that the primary prayer of the assessee that since the opportunity to cross- examine was not provided, the assessment be quashed cannot be accepted. However considering the judicial precedent as laid down in CIT vs Sunil Aggarwal [2015] 379 ITR 0367 (Delhi) and ITO vs M.Pirai Choodi [2011] 334 ITR 262 (SC) it is considered appropriate to set aside the issue back to the file of the Assessing Officer with a direction to provide the assessee an opportunity to cross-examine Sh. Rakesh Gupta whose statement has been relied upon by him and thereafter pass a speaking order in accordance with law. The opportunity so provided it is hoped is utilized by the assessee in good faith by fully participating in the proceedings as failing which the AO would be at liberty to pass a speaking order in accordance with law on the basis of material available on record.
In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open court on 30th September, 2016.