TaxTMI 
TaxTMI 
2015 (2) TMI 639
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....sent appeals under Section 260A of the Income Tax Act, 1961 (for short, the 'Act') proposing the following common question of law, as formulated in Tax Appeal No.429 of 2000, for determination of this Court in all the three appeals, which reads as under:- "Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 5,22,500/- made u/s.69 of the Act for payment of "on money" to the builders for acquisition of bunglow?" 4. The brief facts leading to present appeals can be summarized thus:- 4.1. On 27.03.1992, a search was carried out under Section 132 of the Act at the residential premises of Shri Dilipkumar Damodardas Desai and Shri Bharatbhai S. Desai. Both the said persons were partners in M/s.Desai Brothers and Mahadevia Associates, engaged in development of bunglows under the Scheme 'Tulip-I and Tulip II' near Doordarshan, Ahmedabad. Simultaneously, the premises of the said firm were surveyed under Section 133A of the Act. During the proceedings, the said two persons admitted to have received 'on money' while selling bunglow in the said 'Tulip' Scheme and they categorically stated that 60% of consideration was received by cheque and 40% i....
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....tled principle of natural justice that any material which is to be used to against the assessee for purposes of assessment is to be put to the assessee and he is also to be allowed an opportunity to rebut the same. Use of any material or information without notice to the asessee is prohibited and any illegal use of material vitiates the whole assessment and renders it void. There are catena of authorities supporting the above proposition. We may usefully quote the following obserations of the Hon'ble Supreme Court in the case of Kishanchand Chellaram V/s. CIT 125 ITR 713 at 714 (head notes):- "Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1995 and March 9, 1957, did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of Rs. 1,07,350/- was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding, the statements of the manager in those two letters were based on heresay, as, in the absence of evidence,it could not be taken that he must have been in ....
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....he assessee but it appears that no such further cross-examination was carried, it not being clear whether assessee's representative insisted for such cross-examination or not. At any rate, in the re-examination, the witnesses did not state that they received any on money from the assessee for sale of bungalow. The statement further established firstly that as per allotment letter dated 27.05.1993 and other documentary evidence, the assessee had shown to have paid only Rs. 6 lacs and Rs. 12,000/- for acquiring the bungalow, Secondly, inspite of search, the revenue Authorities could not lay hand on any document which could show that the assessee had paid on money. Thirdly, the Assessing officer could not extract from the witness that assessee had paid on money inspite of concealed threat in question No.4 of the re-examination. The position that emerges is that witnesses when they were examined in presence of the assessee (as required by tune of natural justice) did not say that the assessee paid any on money but on the contrary, stated in reply to question No.4 referred to and quoted above on money other than Rs. 6,12,000/- was paid to them." 5. Learned advocate Mrs.Mauna Bhatt ap....
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....rse in nature and, therefore, it would be a ground for interference with the impugned order in exercise of powers under Section 260A of the Act. 7. Per contra, learned advocate Mr.M.J. Shah appearing for learned advocate Mr.J.P. Shah for the respondent - Assessee in all the appeals supported the findings leading to deletion of addition under Section 69 of the Act on the basis of the statement and further cross-examination of said witness Mr.Desai, who did not support the claim that 'on money' was paid by the respondent - Assessee. According to him, there was no iota of evidence to show that any of the respondent- Assessee paid 'on money' and made unexplained investment and, therefore, considering the findings of facts recorded by the Tribunal, there is no question, much less substantial question of law, involved in the present group of appeals and, therefore, the same cannot be entertained in light of the decisions rendered in the case of (i) Commissioner of Income- Tax, Salem V/s. P.V. Kalyanasundaram reported in 294 ITR 49(SC); (ii) Additional Commissioner of Income-Tax, Bombay City-I V/s. Miss Lata Mangeshkar reported in 97 ITR 696 (Bom); (iii) Commissioner of Income-Tax V/s.....