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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Shri Mahendra Kumar Soni (hereinafter referred to as ‘the assessee’), by filing the present appeal, sought to set aside the impugned order dated 21.01.2016 passed by Ld. CIT(A)- 10, New Delhi qua the assessment year 2007-08 on the grounds inter alia that:- “1. That the Commissioner of Income tax (Appeals) ("CIT(A)") has erred on facts and in law in upholding the order of the Assessing Officer making an addition of Rs.8,12,360/- u/s 143(3)/147 of the Income Tax Act, 196 l ("Act").
1.1 That the assessment order dated 30.07.2014 assessing income at Rs.10,26,200/- by the ITO Ward 23(1) ("AO") is arbitrary, unjust and illegal on factual and legal grounds.
1.2 That the CIT(A) failed to appreciate that the Appellant has entered into a genuine transaction and made payments by account payee cheque.
1.3 That the CIT(A) failed to appreciate that the Appellant has also offered his income from sale of the allegedly fake purchases to tax and tax has been duly paid.
1.4 That the CIT(A) failed to appreciate that the Appellant has furnished bills containing PAN, CST number and TIN number from the seller and made the payment by account payee cheque thereby discharging his obligations under the Act.
1.5 had not furnished inaccurate particulars of income by claiming the expenses as alleged by the AO in the impugned order nor had the Appellant made any incorrect claim thereof.
2. That on the facts and circumstances of the case, the CIT(A) has upheld the assessment order without appreciating the facts of the case
2.1. That the CTT(A) has failed to appreciate that this is not a case where the Appellant failed to discharge his onus of proving the identity of the seller and the genuineness of the transaction.
2.2. That the profit from sale of diamonds has already been offered to tax and tax has already been paid. Any attempt to tax the whole amount will result in double taxation.
2.3. That the CIT(A) has failed to appreciate that mere statement by the seller that they are indulging in book entries does not make all transaction sham transactions especially in light of the fact that their statements show that physical delivery of diamonds as handed over to actual buyers.
3. That on facts and circumstances of the case, the CIT(A) has erred in confirming the order of the AO as the transaction reling to the Appellant has not specifically been alleged to be bogus but the order has been passed merely on the presumption that it is bogus, which is illegal and impermissible in law.
4. That on facts and circumstances of the case, the CIT(A) has erred in confirming the order of the AO in light of the fact that there is a matching of the sale and purchase made by the Appellant, which has been ignored by the authorities below.
5. That on facts and circumstances of the case, the CIT(A) has erred in confirming the order of the AO as it is based on mere surmises and conjecture.
That on facts and circumstances of the case, the CIT(A) has erred in confirming the order of the AO and has failed to appreciate that the evidence submitted by the Appellant is conclusive proof to substantiate the case of the Appellant and that no adverse material has been brought on record.
7. That the CIT(A) has failed to appreciate that non- granting of opportunity to cross examine the person on who's statement the addition os made renders the assessment as void. Any assessment based on a statement without confronting the assessee or allowing an opportunity to cross examine is void in law
The CIT(A) has failed to adjudicate on the additional ground taken by the Appellant on non-granting of opportunity to cross examine.
That on facts and circumstances of the case, the CIT(A) has erred in confirming the order of the AO adding notional commission to the income of the Appellant. 10. That without prejudice to Ground No.1, 2 & 3 above, the penalty as levied is excessive.”
Briefly stated, the facts of this case are : proceedings under section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’) were initiated against the assessee on the basis of information received from Investigation Wing, New Delhi that from the search and seizure operation conducted in the case of M/s. Rajendra Group, M/s. Sanjay Chaudhary Group and M/s. Dharmichand Jain Group, M/s. M. Vajubhai Jewellers, proprietorship concern of the assessee has obtained accommodation entries to the tune of Rs.7,96,430/- on account of sale made during the financial year 2006-07. Consequently, notice u/s 148 was issued and in response thereto, assessee filed original return filed on 23.10.2007 declaring income at Rs.2,13,840/- to be treated as reply to the notice.
The assessee was called upon to provide the confirmations from the parties and in response, Shri Varun Mehra, CA put in appearance, filed copy of agreement of transaction and details of material received along with vouchers in support of the payment o frs.7,96,430/-. Finding the explanation furnished by the assessee not satisfactory, the AO came to the conclusion that the assessee had made purchases from his undisclosed money and for regularizing his purchases, he approached the Rajendra Group for bogus bills and consequently, made an addition of Rs.10,26,200/- (Rs.7,96,430/- on account of bogus purchases + Rs.15,390/- being commission paid to the entry operator to the tune of 2% to 2.5%).
The assessee carried the matter before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. At the very outset, the ld. AR for the assessee contended that the CIT (A) has erred in not disposing of the additional grounds inter alia :- “The Appellant has the legal right to cross examine the third party on whose support the Respondent has proceeded to make reopen the assessment and sought to make additions. The denial of the legal right is against the principles of natural justice and hence unsustainable under law. Without such opportunity the neither additions are unilateral and liable for rejection at the outright.” and as such, adequate opportunity of being heard has not been given to the assessee during the appellate proceedings by the ld. CIT (A).
From the copy of application dated 17.03.2016, copy of affidavit and copy of additional grounds of appeal
, lying at pages 1 to 5 of the paper book available on the file, it is apparently proved that the additional grounds were filed by the assessee during the appellate proceedings whereupon no findings have been returned by the CIT (A) nor any such ground has been enumerated in the grounds of appeal reproduced by the ld. CIT (A) in para 3 of the impugned order.
8. So, without entering into the merits of this case, we are of the considered view that the additional grounds, undisputedly filed by the assessee during the appellate proceedings on 20.01.2016, were required to be decided by the ld. CIT (A) by providing opportunity of being heard to the assessee. Consequently, the present appeal is hereby allowed and file is ordered to be restored back to the ld. CIT (A) to pass fresh order after considering the additional grounds by giving an adequate opportunity of being heard to the assessee.
9. In view of what has been discussed above, the present appeal filed by the assessee is hereby allowed for statistical purposes.
Order pronounced in open court on this 29th day of April, 2016.