TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 54
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.... 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 appellant. All this is a clear violation of the princip....
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....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 demand, is a serious flaw which makes order a nullity, as it amounts....
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....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 the appellant's valuation is supplied to the appellants,the appellants....
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....bsp; 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 18.24 02.08.2007 Diam International Allowed 33.92 7,03,842 18.24 06.08.2007 Meistar Export Allowed 204.51 21,89,405 18.85 10.08.2007 Meistar Export Allowed 238.08 21,41,690 23.79 20.08.2007 Ram Diamonds Allowed 183.05 24,67,434 21.22 03.09.2007 Diam International Allowed 247.9 27,79,467 21.39  ....
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.... 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 Millennium Star Disallowed 140.44 23,00,225 23.76 07.01.2008 Little Diam Disallowed 33.83 7,85.104 21.75 05.01.2008 Rare Diamonds Pvt Ltd Disallowed 114.19 16,13,382 29.54 10.01.2008 Little Diam Disallowed 212.63 33,19,459 29.54 21.01.2008 Daksh Diamonds Disallowed 220.44 20,20,180 34.98 02.02.2008 Little Diam Disallowed 215.33 15,50,336 27,25 16.02.2008 Minal Gems Disallowed 151.24 26,79,291 35.00 29.02.2008 Nice Diamonds Disallowed 510 47,43,510 35.00 10.03.2008 Impex Gems Disallowed 429.18 17,93,972 32.13 27.03.2008 Impex Gems Disallowed 260 11,70,000 35.27 Avg. Value Addition % for Disallowed Parties 24.57 &nbs....
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....ily justify any prima facia inference that the past capital produced income during the accounting year. Before such an inference could be drawn, some foundation must he laid for the assumption that there was income from such capital during the accounting year. Therefore, on the facts and in the circumstance of the case, the 'Tribunal erred on the additions of amounts in question." 6.3.30. Thus, keeping in view the present facts of the case and applying the ratio of the various decisions of Hon'ble jurisdictional IT AT of Mumbai as well as jurisdictional. Court of Mumbai where various legal issues arising out of additions of similar nature have been thread-bare discussed and also other decision of Hon'ble High Courts/ Supreme Court, it will be difficult to sustain the additions made by the AO only on the ground oGBP statement of Bhanwarlal Jain. On the one hand the appellant has strongly submitted that they have made purchases and the entire payment through banking channel, but on the other hand, the AO has not been able to bring on record the details of cash actually paid by the appellant to Shri Bhanwarlal Jain concerns to get any entry for Bogus Purchases , In view....