AMEETA DHARAMPAL KAPUR,MUMBAI vs. ITO 21(3)(1), MUMBAI

O R D E R Per Mahavir Singh, Judicial Member

This appeal by assessee is arising out of the order of the CIT(A) – 32, Mumbai, in appeal No.CIT(A)-32/ITO-21(3)(1)/IT-246/10-11 dated 07.12.2011. The assessment was framed by the ITO 21(3)(1), Mumbai, for A.Y. 2003-04 vide his order dated 30.12.2010 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

“Without prejudice to the above the Ld. CIT(A) failed to appreciate that the Ld. Assessing Officer has made the additions on the basis of material collected at the back of the Appellant and without providing the appellant opportunity to cross examine the evidence so collected. Therefore, treating the Long Term Capital Gain of Rs.5,21,350/- as undisclosed income is against the principles of natural justice and hence the same may be deleted.”

The learned counsel for the assessee further drew our attention to the reasons recorded for issuing notice u/s. 148 of the Act, dated 30.03.2010 (which are reproduced in the order of the AO as well as that of the CIT(A)), which reads as under :-

“Shri Narendra R Shah (Hawala Operator) has admitted before the income tax authorities that he has provided to several parties various financial accommodation transactions for the purpose of claiming Capital Gains, Gifts, etc. in respect of Also, he has submitted that you are one of the beneficiary who has availed financial accommodation entries for bogus Long Term Capital Gains for shares of M/s. Database Finance Ltd.” The learned counsel for the assessee stated that the assessee has sold 700 shares of Data Finance Ltd. on 20.01.2003 for a sum of Rs.5,21,350/- through Action Financial Services (India) Ltd., which were purchased by her on 10.04.2001 for a sum of Rs.8,330/- and through a broker Drishti Securities Pvt. Ltd. According to the learned counsel Shri Narendar R Shah, allegedly being a hawala operator was examined and on the basis of his statement, addition was made and assessment was reopened. According to the learned counsel this was done behind the back of the assessee and no opportunity to cross examine the party was allowed. According to her this issue needs setting aside to the file of the AO so that he can allow an opportunity to the assessee to cross-examine the party and rebut the material collected at her back. When this was put to the learned DR, he fairly conceded that the issue can be sent back to the file of the AO for fresh adjudication after allowing opportunity to the assessee. In terms of the above, we set aside the orders of the lower authorities and remand the matter back to the file of the AO for reconsideration of this issue afresh after allowing the assessee reasonable opportunity to cross examine the party and being heard.

Order pronounced in the open court on this day of 15th June 2016.