S.R. INFRA CONCEPT PVT. LTD.,,SURAT vs. THE INCOME TAX OFFICER, WARD-2(1)(2),, SURAT

The grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax(Appeals) has erred in confirming the action of assessing Officer in making addition of Rs.16,32,50,000/- on account of share capital and share premium treated alleged unexplained cash credit u/s 68 of the Income Tax Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax(Appeals) has erred in confirming the action of assessing Officer in making addition of Rs.10,20,275/- on account of alleged unaccounted brokerage charges u/s.194H of the Income Tax Act, 1961, received from S.V. Estate.

With help of the above chart, ld Counsel pointed out that Assessing Officer issued summons to thirty nine (39) parties on 11.03.2014 whereas assessment was framed on 31.03.2014, that is, effectively assessment proceedings were completed in twenty (20) days whereas law provides for two years times from the end of the assessment year. Such a short span of time is not reasonable by any stretch of imagination. Since assessee’s case was selected for scrutiny on 03.08.2012, the Assessing Officer could have issued summons under section 131 of the Act, well in advance rather than issuing the same on 11.03.2014 (i.e. fag end of limitation for framing the assessment). Under such circumstances, even show cause notice could have been issued in time which, in turn, would have enabled the assessee to file reply. This would have ensured that principles of natural justice have been observed while framing assessment. Thus, it is evident that Assessing Officer has not afforded “reasonable opportunity” to the assessee to set out its case while framing the assessment. The ld Counsel also pointed out that material used against assessee has not been confronted to the assessee; hence, the same would not constitute “admissible evidence” in the eye of law.Under such facts and circumstances, matter must be remanded to Assessing Officer for

In respect of ground no.2 raised by the assessee, which relates to addition of Rs.10,20,275/- on account of alleged unaccounted brokerage charges u/s 194H of the Income Tax Act, 1961, received from S.V. Estate. The Assessing Officer found that as per AIS details in ITD system, assessee had received brokerage charges of Rs.10,20,275/- from S. V. Estates on 31.03.2011 and TDS of Rs.1,02,028/- was effected thereon. However, the said amount was not credited in the books of the assessee. The assessee submitted before Assessing Officer that such sum was received in AY.2012-13 (subsequent year) and hence, the same was not included in the books of accounts for AY.2011-12 (year under consideration). The Assessing Officer was of the view that assessee follows “mercantile system of accounting” and hence, irrespective of the fact whether such sum was received during the year or not, assessee was bound to account for the same in AY. 2011-12. Hence, Assessing Officer made the impugned addition which was confirmed by CIT(A) as well. The ld Counsel submits that such sum was received in AY.2012-13 (Subsequent year) and accordingly, the same has been offered for tax in AY.2012-13, thus, the underlying amount has already been offered for tax. If the impugned addition is sustained, it shall tantamount to double taxation of the same sum which has never been the intention of the Legislature. Without prejudice to the above, the ld Counsel also argued that if the impugned addition is confirmed, then direction may be given to Assessing Officer to reduce such sum from income of AY.2012-13 so as to avoid double taxation.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of

We note that the Hon’ble Supreme Court in M.S.Gill vs The Chief Election Commission 1978 AIR SC 851 held “The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice.

Considering the above facts, we note that assessee has not given sufficient opportunity of being heard and could not plead his case successfully before the assessing officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of assessing officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith.

In respect of ground no.2, we note that the income has been offered in subsequent assessment year 2012-13, thus, the underlying amount has been suffered for tax, therefore, we direct the assessing officer to verify the fact that whether income has been offered in subsequent assessment year 2012-13 for taxation, if the assessee has offered such income in subsequent assessment year 2012-13, then in that circumstances, the assessing officer should delete the addition. Alternatively, if the impugned addition is confirmed by assessing officer, then we direct the Assessing Officer to reduce such sum from income of AY.2012-13 so as to avoid double taxation.

In the result, ground No.2 raised by the assessee is allowed for statistical purposes to the extend indicated above.

In the combined result, appeal filed by the assessee is allowed for statistical purposes.