EVERSMILE CONSTRUCTION CO. P. LTD,MUMBAI vs. DCIT CEN CIR 5, MUMBAI

The assessee has raised the following grounds:-

The brief facts of the case are that the assessee filed its return of income on 21.07.2004 declaring business loss to the tune of Rs.7,97,31,311/- and long term capital loss to the tune of Rs.76,14,137/-. A search action u/s.132 of the Income Tax Act, 1961 ( in short “the Act”) was carried out on the assessee and its director Shri Vinod Goenka on 22.03.2007. The assessment u/s.143(3) r.w.s 153A of the Act was completed on 31.12.2008, determining the loss A.Y.2003-04 to the tune of Rs.5,92,92,430/-. The assessee paid tax u/s.115JB of the Act on the book profit computed at Rs.14,09,060/-.

Thereafter, the assessment was reopened on the following information:-

Accordingly, notice u/s.148 dated 22.12.2009 was issued and served upon the assessee. In response to the same, assessee furnished A.Y.2003-04 return of income for the year in question on 15.01.2010 declaring total loss to the tune of Rs.7,80,41260/-. Notice u/s.143(2) of the Act dated 10.08.2010 was issued and served upon the assessee. The documents seized during the course of search at the office premises of M/s. K. Sera Sera Production Ltd. of which Shri Ashok H. Pamani was the Chairman, including copy of affidavit dated 03.09.2010 were provided to the assessee. Thereafter, the assessment was completed by disallowance of the loss to the tune of Rs.1,70,00,000/-, basically on reliance on the affidavit executed by Shri Ashok Harikishan Pamani. Since the assessee was not satisfied with the assessment, therefore an appeal was filed before CIT(A) but the CIT(A) has confirmed the order of Assessing Officer. Feeling aggrieved the present appeal has been filed before us.

Issue no.1 & 2 are inter connected therefore are being taken up together for adjudication. At the very outset the learned representative of the assessee has argued that the addition to the tune of Rs.1,70,00,000/- was made by the Assessing Officer on the basis of the affidavit executed by Shri Ashok H. Pamani but no opportunity of cross examination was given to him therefore the addition to the tune of Rs.1,70,00,000/- is wrong against law and facts and is liable to be set aside. In support of these contentions the learned representative of the assessee has placed reliance on the law settled in [2011] 334 ITR A.Y.2003-04 262 (SC) in case Income Tax Officer Vs. M. Pirai Choodi. On the other hand the learned representative of the department has strongly relied upon the order passed by the CIT(A) in question. The order in question perused. Apparently the affidavit executed by Shri Ashok H. Pamani was the base of the addition to the tune of Rs.1,70,00,000/. The assessee was not given an opportunity to cross examined Shri Ashok H. Pamani even after the assessee prayed for cross examination. No doubt the order speaks that the documents have been given to the assessee for perusal, but it is not on record that an opportunity of cross examination of Shri Ashok H. Pamani was given to the assessee.

At the time of argument before the Tribunal the assessee only raised the demand to cross examine Shri Ashok H. Pamani. In view of the law settled in Income Tax Officer Vs. M. Pirai Choodi (Supra) and in view of this fact that the Assessing Officer has passed the order in question without giving an opportunity to cross examine Shri Ashok H. Pamani. Therefore, the order passed by the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law. Accordingly, we set aside the order passed by the CIT(A) in question and restore the file before the Assessing Officer to provide an opportunity to cross examine Shri Ashok H. Pamani and pass the fresh order in accordance with law. A.Y.2003-04

In result the appeal filed by the assessee is hereby allowed for statistical purpose.