TaxTMI 
TaxTMI 
2017 (10) TMI 54
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....usal of the Profit & Loss A/c, it is noticed that during the year, the assessee has claimed expenses of Rs. 17,43,80,469/- under the head Purchases of Diamond'. During the course of the reassessment proceedings, the assessee was asked to file documentary evidences to justify the genuineness of the purchases made from aforesaid parties. In reply, the assessee filed certain details and also asked the AO to give copies of all materials and evidences on the basis of which AO formed his opinion to make the addition in respect of such purchases. However, nothing was furnished to the assessee. 5. In view of above observation, the AO estimated profit of 6% on such purchases of Rs. 5,62,71,184/- and made addition of Rs. 33,76,271/-. 6. By the impugned order, CIT(A) deleted the addition after observing as under:- 6.3.7. On the above facts, it is obvious that the AO while supposedly acting on a report of the Investigation Wing and some alleged third party evidence, never made the said report and evidence available to the appellant. Thus, the appellant was denied a chance to rebut the evidence by cross examining those, who had allegedly given statements that could incriminate the ....
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....ought to be used against assessee in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the * CIT(A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dt. 15lh February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal on this very issue." 6.3.9. Opportunity of cross examination of witnesses is an essential ingredient of the principle of natural justice. This has been affirmed by the Hon'ble Supreme Court in the case of Andaman Timber Industries [Civil Appeal No.4228 of 2006, Date of Pronouncement - September 02, 2015]. In that case, the Hon'ble Supreme Court held that not allowing assessee the opportunity to cross-examine witnesses, whose statements were made the basis of a deman....
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....ative orders affecting prejudicially the party in question. 6.3.13. A similar matter came up before the Hon'ble Supreme Court in the case of M/s. Gira Enterprises & Another (Civil Appeal Nos. 433-434 0/2006) Dated 21/08/2014. In that case, it was alleged that prices declared for import purposes had been suppressed. The case was based on evidence contained in a computer printout, reportedly prepared on the basis of import data, allegedly collected from Mumbai Port. This print out showed import prices, higher than those declared by the assessee. This printout was not made available to the assessee in the course of adjudication proceedings. After hearing the matter, the Hon'ble Supreme Court went on to set aside the order with below extracted observations: "22. ...the respondent (revenue) did not supply the information (alleged computer printout) which formed the basis of the conclusion that the appellants herein under- valued the goods imported. In such a situation, the appellants obviously cannot and did not have any opportunity of establishing that the claim of the revenue is unsustainable in law. If the information, which formed the basis for the revenue to reject....
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....,43,816 16.60 04.05.2007 Rahul Export Allowed 916.34 45,81,700 9.74 07.05.2007 Manchester Overseas Allowed 465.27 53,97,132 9.77 05.06.2007 Exotic Jewels Allowed 353.02 30,18,674 9.77 12.06.2007 Melstar Export Allowed 221.41 19,19,182 14.88 19.06.2007 Melstar Export Allowed 610.37 44,72,791 16.59 25.06.2007 Exotic Jewels Allowed 237.86 21,53,109 15.81 06.07.2007 Ram Diamonds Allowed 69.43 9,85,906 15.81 25.06.2007 Manchester Overseas Allowed 298.17 26,99,035 18.15 06.07.2007 Ram Diamonds Allowed 150.89 21,01,365 18.15 21.07.2007 Ram Diamonds Allowed 222.12 13,29,056 16.11 21.07.2007 Fine Star Allowed 42.88 24,44,160 15.26 26.07.2007 Melstar Export Allowed 64.45 9,66,750 15.26 26.07.2007 Meistar Export Allowed 21.64 6,81,660 15.26 01.08.2007 Diam International Allowed 209.92 14,66,702 18.....
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.... 20.00 Date Party Name Status as DiaCt Amount Avg VA % 03.05.2007 Daksh Diamonds Disallowed 190.54 32,57,063 15.59 05.05.2007 Little Diam Disallowed 917.3 45,86,500 15.44 22.06.2007 Daksh Diamonds Disallowed 240.18 21,74,109 19.93 22.06.2007 Manchester Overseas Disallowed 307.18 27,80,593 17.43 21.07.2007 Little Diam Disallowed 43.26 24,65,820 15.26 06.08.2007 Toaksh Diamonds Disallowed 212.81 34,60,054 19.19 21.08.2007 Millennium Star Disallowed 146.02 21,58,906 21.22 03.09.2007 Kittle Diam Disallowed 417.97 32,25,981 24.14 15.09.2007 Rare Diamonds Pvt Ltd Disallowed 132.3 15,38,059 21.41 06.10.2007 Rare Diamonds Pvt Ltd Disallowed 197.4 18,77,944 21.92 20.10.2007 Millennium Star Disallowed 164.79 18,70,543 23.76 23.10.2007 Rare Diamonds Disallowed 167.85 13,83,082 23.76 24,10,2007....
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....ular year. There must be some material relatable to the accounting year which taken with the "past history" may reasonably entitle the, income-tax authorities to hold that there must in fact have been some concealed income during the accounting year and which is liable to assessment. To base an assessment barely on a presumption relating to capital found to exist in some previous year appeared to be unwarranted. The income-tax- authorities proceeded on the view that the burden of proof was on the assessee to show that the "past capital" has disappeared, for which there was no justification, and no authorities has been shown. It is well the assessment of any particular year must be based not on mere suspicion or bare guess, but on legitimate material from which a reasonable inference of income having been earned during the accounting year in question could be drawn, and that the initial burden of finding such material, however slight, was on the. income-tax authorities and not on the assessee. The facts before the income- tax authorities-were not sufficient to shift the burden of proof on to the assessee. There facts did not necessarily justify any prima facia inference that the ....