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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI A.T. VARKEY
O R D E R PER A.T. VARKEY, JUDICIAL MEMBER :
This appeal, at the instance of the Revenue, is filed against the order of CIT (Appeal), Karnal dated 09.01.2013 for the assessment year 2008- 09.
The assessee is a Trust running Education Institutions under the name and style of Shri Krishan Institute of Engineering & Technology and Shri Krishan Polytechnic at Kurukshetra. The trust exists solely for educational purposes. The Trust was granted exemption u/s 10(23C)(vi) vide order dated 31.10.2008 for the AY 2008-09 onwards by Chief Commissioner of Income Tax, Haryana Region, Panchkula. The assessee filed return declaring total loss at Rs.93,98,215/- on 29.09.2008. The return was accompanied with audited set of accounts. During the course of assessment proceedings, the assessee produced complete books of accounts supporting vouchers, bills, bank statements etc. as was requisitioned by Assessing Officer. The Assessing Officer has proceeded to frame the assessment by making various additions and thereby computing the total income at Rs.1,78,79,322/-. Being aggrieved, the assessee filed the appeal before the ld. CIT (A) who in turn partly allowed the appeal of the assessee.
The revenue being aggrieved is in appeal before us.
At the outset, ld. AR contended that the basis of the additions are based on statements recorded by the AO behind the back of the assessee and the assessee’s plea for cross examination was not allowed by the AO, therefore, vitiating the entire additions for violation of natural justice and cited the decision of Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries in Civil Appeal No.4228 of 2006 wherein the Hon’ble Supreme Court has held that violation of natural justice makes the order a nullity. Ld. AR also cited the following judgments :-
(i) M.G. Shahani & Co. (Delhi) Ltd. vs. Collector of Central Excise – 1994 (73) ELT 3 (SC);
(ii) United Commercial Bank vs. CIT – (1982) 137 ITR 434 (Cal.);
(iii) Maharani Kanak Kumar Sahiba vs. CIT (1955) 28 ITR 462 (Pat.);
(iv) Karnataka Wakf Board vs. State of Karnataka – AIR 1996 Kar. 55; (v) Ghasi Ram Dayanand vs. CST – 92 STC 478
We have heard both the sides. We are, however, not convinced by the aforesaid argument of the ld. AR because of the facts and circumstances of the case. Since we find that there are certain evidences collected by the AO which have come on record and which necessarily had to be tested on the touchstone of cross examination particularly when the assessee has made a specific request for it, then it ought to have been done before addition could have been saddled on the assessee. However, we find that in the interest of substantial justice and we take additional note of the fact that in page no. 7 & 8 of the AO order, the AO refers to certain enquiry ordered by the Hon’ble High Court against the assessee and the AO has relied on the report of the Enquiry Committee too, so we are of the opinion that this matter needs to be remanded back to the file of the AO particularly to cross examine the witnesses and to give opportunity to the assessee to adduce evidences if the assessee feels it has to rebut the claim of the AO. Here in this case, the AO has cited lack of time to deny opportunity to the assessee to cross examine since limitation was setting in, so he completed the assessment. For remanding the entire proceedings, we rely on the Three Hon’ble Judges decision of the Hon’ble Supreme Court in the case of Tin Box Company v. Commissioner of Income-tax, 249 ITR 216 (SC), wherein the Hon’ble Lordships held as under :-
“ It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact- finding authority, that reads thus :
"We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard."
That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee.
The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.”
Therefore, in the interest of justice, we are of the opinion that the entire proceedings are set aside to the file of the AO to proceed de novo against the assessee untrammeled by any observation made by us in this order. We order accordingly. 6. In the result, the appeal of the revenue is allowed for statistical purposes.
Order pronounced in open court on this 5th day of February, 2016.