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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Ms. Arati Vissanji and Shri Chintan Ghelani Department by: Shri Shandrajit Singh सुनवाई क" तार"ख / Date of Hearing: 05.04.2016 घोषणा क" तार"ख /Date of Pronouncement: 05.07.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 12.07.2011 passed by the Commissioner of Income Tax (Appeal) 36, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2003-04. A.Y.2003-04
The assessee has raised the following grounds:-
“1. In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that- (a) Order passed u/s.143(3) read with Section 147 of the Income Tax Act, 1961 pursuant to the notice dated 22nd December, 2008 issued u/s.148 of the Act is improper in law. Without prejudice to the above and in the alternate (b) There was no diversion of sale consideration of s.170 lacs by the appellant as alleged to have been held by the AO in the said order and accordingly no adjustment is required to be made to the loss determined as per order passed U/s.143 read with Section 153A of the Act dated 31st December, 2008.
2. It is humbly prayed that the reliefs as prayed and such other and further reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice, should be granted.”
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:-
information has been received by this office that Shri Ashok H. Pamani had purchased four units at Ascot Centre at Sahar, Mumbai a project developed by M/s. Veena Estates Pvt. Ltd. which amalgamated with M/s.Eversmile Construction Co. Pvt. Ltd. These documents reveal that Shri Ashok Pamani had made payment of Rs.1,73,27,500/- to M/s. Veena Estates Pvt. Ltd. and an amount of Rs.1,70,00,000/- was gifted to Smt. Shanita Jain (1 crore) and Smt. Sunita Bali (70 lakhs) which in fact represented consideration for purchase of units at Ascot Centre. Due to diversion of the sale consideration in the form of gifts the receipts of the project have been shown less by the assessee company to the extent of Rs.1,70,00,000/-. By virtue of assessee’s failure to disclose all true and material facts relating to the sale of units 105 to 108 to Shri Ashok Pamani the income chargeable to tax has escaped assessment to the extent of Rs.1,70,00,000/- in terms of provisions of sec. 147.
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:-
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.
Order pronounced in the open court on 5th July, 2016. (B.R.BASKARAN) (AMARJIT SINGH) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 5th July, 2016 MP MP MP MP