SUNIL R. PHADTARE HUF,BHIWANDI vs. ITO WD 1(4), KALYAN

सुनवधई की तधयीख / Date of Hearing : 08/07/2016 घोषणध की तधयीख /Date of Pronouncement : 08/07/2016 आदेश / O R D E R These are the two appeals filed by the assessee against the two separate orders dated 4.3.2015 passed by the ld.CIT(A)-2, Mumbai for the assessment years 2006-07 and 2007-08. Since the appeals before us relate to the same assessee, and the issue involved therein is common, for the sake of convenience, they are clubbed together, heard together and disposed of by this consolidated order.

2. The assessee has raised the following grounds in “1. On the facts and in the circumstances of the case and in law the ld.CIT(A), Thane has erred in upholding the validity of the 2 3697 & 3698/Mum/2015 reopening of assessment u/s 147, without appreciating the position that a. The AO had no valid reasons to believe that any income has escaped assessment and the notice u/s. 148 has been issued by the AO without any application of mind, b. notice u/s. 148 has been issued disregarding the provisions of S.151 (2).

2. Without prejudice to ground no. 1, on the facts and in the circumstances of the case and in law the learned CIT(A)-2, Thane has erred in upholding the addition of Rs. 1,03,326/- being speculation profit on shares, without appreciating the fact that appellant has already offered business income of Rs. 1,38,000/-, thereby taxing the same amount twice.

3. Without prejudice to ground no. 1, on the facts and in the circumstances of the case and in law the learned CIT(A)-2, Thane has erred in upholding the addition of Rs. 3,90,125/- u/s. 69 as unexplained investment in shares, without appreciating the legal position that S. 69 applies only to investments which are not recorded in the books of accounts.

The assessee has raised the following grounds in :

1. On the facts and in the circumstances of the case and in law the ld.CIT(A), Thane has erred in upholding the validity of the reopening of assessment u/s 147, without appreciating the position that b. The AO had no valid reasons to believe that any income has escaped assessment and the notice u/s. 148 has been issued by the AO without any application of mind, b. notice u/s. 148 has been issued disregarding the provisions of S.151 (2).

in is a legal ground. The 4 3697 & 3698/Mum/2015 same is admitted. The facts relevant to the above said issues are that the department carried out a search and seizure operation on the premises of a person named as Shri Mukesh Chokshi, who admitted that he and his group of companies were engaged in the business of providing accommodation bills for purchase and sale of shares in order to enable the persons to generate the speculation profit /loss, Short Term Capital Gain and Long Term Capital Gains, etc. It was noticed that the assessee herein had also purchased shares from the group companies belonging to Shri Mukesh Chokshi. Hence, upon receipt of information in this regard, the AO re-opened the assessment of this assessee for the years under consideration. The AO treated the purchase value of the shares as bogus purchases and assessed the same as income of the assessee. The AO also estimated the expenditure that could have been incurred by the assessee for getting accommodation bills of the purchase value and assessed the same as unexplained expenditure. The ld. CIT(A) dismissed the appeals filed by the assessee and hence they have filed these appeals before the Tribunal.

4. The ld. Counsel appearing for the assessee submitted that the assessee herein had sought for cross-examination of Shri Mukesh Chokshi, since the AO framed the assessment on the strength of the statement given by Shri Mukesh Chokshi. He submitted that the assessee was not afforded the opportunity to cross-examine Shri Mukesh Chokshi. Accordingly, the ld. AR submitted that the AO should not have 5 3697 & 3698/Mum/2015 made the additions by violating the principles of natural justice. Accordingly he prayed that the assessee should be provided with adequate opportunity to cross-examine Shri Mukesh Chokshi. The Ld A.R submitted that the same would help the assessee to support the share transactions.

5. The ld. DR could not successfully rebut the plea put forth by the ld. AR, though he placed strong reliance on the impugned orders.

6. Having regard to the rival submissions, I am of the view that the AO was not justified in not affording the opportunity of cross examination to the assessee herein and the said action of the AO violates the principles of natural justice. Further, as submitted by the Ld A.R, the assessing officer has made the impugned additions only on the basis of statement given by Shri Mukesh Choksi. Accordingly, I am of the view that the assessee herein should be provided with adequate opportunity to cross-examine Shri Mukesh Chokashi. Accordingly, I set aside the order of ld. CIT(A) in respect of the additions referred above and restore them to the file of the AO with a direction to examine these issues afresh after affording adequate opportunity to the assessee to cross-examine Shri Mukesh Choksi and also after considering any other information and explanations that may be furnished by these assessee. The assessee, no doubt, shall cooperate with the AO in the fresh proceedings before him.

6 3697 & 3698/Mum/2015 7. In the result, the appeals filed by the assessee are treated as allowed for statistical purposes.