TaxTMI 
TaxTMI 
2019 (2) TMI 1131
X X X X Extracts X X X X
X X X X Extracts X X X X
....g income of Rs. 4,41,010/-. The return of the assessee was selected for scrutiny under CASS for the reason Suspicious Long term capital gains (inputs from investigation wing). The notice u/s 143(2) of the Income Tax Act, 1961 was issued on 18.09.2015. The main issue taken up in assessment was exemption of long term capital gains arising from sale of shares of M/s Kailash Auto Finance Limited of Rs. 36,81,687/-. During assessment proceedings assessee has filed documents supporting exemption u/s 10(38) of the Act namely bank statements, broker notes, etc. Purchase and sale took place through doubtless banking channel. Notably no books of accounts were there before AO and Ld CIT(A) during assessment and first appellate proceedings. Show cause notice was issued by Ld AO to assessee as to why section 68 should not be invoked against the stated LTCG exemption claimed by assessee u/s 10(38) of the Act. Assessee replied to same and pleaded for acceptance of LTCG claimed in return of income. In assessment proceedings Ld AO heavily relied on statements of i) Sh Subrata Halder ii) Sunil Dokania iii) Harsvardhan Kayan iv) Narendra Balasia to draw adverse inference against the assessee , and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....generate given amount of unaccounted income. Fourthly law requires that additions under said deeming fiction cannot be made sans incriminating material brought on record which is completely lacking in present case. Lastly section 68 does not apply to sale of shares where no credit within meaning of section 68 can be said to have arisen therein. 8. That on the facts and in the circumstances of the case and in law, ld CIT(A) erred in sustaining the action of ld AO in making addition of Rs. 38,05,850/- without appreciating that no opportunity is given to the assessee to be confronted with back material relied extensively in impugned orders like investigation wing report etc and no opportunity to cross examine the revenue's witness was given despite specific written request in this regard made to Ld AO/CIT(A). 4. During hearing Ld AR has placed on record the written submissions as well as gist of case laws to support his arguments which was duly given to Ld DR also. He requested that keeping in view of the grounds raised by assessee as well as his written submissions alongwith case laws, addition in dispute may be deleted by accepting the appeal filed by the assessee. 5.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 6.1 If objectively and dispassionately section 68 of the Act is dissected following would be key ingredients of the same: 6.1.1 Firstly is requires that "Where any sum is found credited in the books of an assessee maintained for any previous year" that is there is a "sum" found to have been credited in books of assessee for previous year which mandates existence of books of accounts of assesssee sans which section 68 can't be pressed into service; Notably books of accounts are analysed in following provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....du undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "one lakh twenty thousand rupees", the words "two lakh fifty thousand rupees" had been substituted : Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "ten lakh rupees", the words "twenty-five lakh rupees" had been substituted.] (3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe49, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained. (4) Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained." 6.2 From above provisions it is crystal clear that mere b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count is made at any time, is not a "book of account" in a commercial sense. 29. In different legislations the concept of books of account has been employed. One of such oldest legislation is the law of evidence. Section 34 refers to the words "entries in books of account". Section 34 has been interpreted by various High Courts including the apex court. The Supreme Court in the recent judgment delivered in the case of Ishwar Dass Jain v. Sohan Lal, has observed as under (headnote) : "Under Section 34 sanctity is attached in the law of evidence to books of account if the books are indeed 'account books', i.e., in original if they show, on their face, that they are kept in the 'regular course of business'." 30. So, the accounts under Section 34 means accounts which are maintained in the regular course of business. 31. The income-tax legislation has been using the term "book" or "books of account" right from its inception. But, these terms are defined in the Act for the first time by the Finance Act, 2001, with effect from June 1, 2001. Section 2(12A) defines the said terms to mean : "(12A) 'books or books of account'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accounting record provides the best foundation for filing returns of both direct and indirect taxes. Accounting is called a language of business. Its aim is to communicate financial information about the financial results. This is not possible unless the main objectives of the books of account are to maintain a record of business : to calculate profit earned or loss suffered during the period of time, to depict the financial position of the business ; to portray the liquidity position ; to provide up to date information of assets and liabilities with a view to derive information so as to prepare a profit and loss account and draw a balance-sheet to determine income and source thereof. Thus, the term "books of account" referred to in Explanation 5 must answer the above qualifications. It cannot be understood to mean compilation or collections of sheets in one volume. The books of account referred to are those books of account which are maintained for the purposes of the Income-tax Act and not diaries which are maintained merely as a man's private record ; prepared by him as may be in accordance with his pleasure or convenience to secretly record secret, unaccounted clan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO u/s 68 of the Act (which phrase is also employed in section 69 and section 69A etc) can't be implanted by any other authority. This view is fortified by the following decisions:- INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ―D‖: NEW DELHI ITA No. 2835/Del/2015 (Assessment Year: 2012-13) Smt. Tripat Kaur Date of pronouncement 09/10/2018 "...If authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorized under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to perform an action on any particular issue, then it is that authority alone who should do that action. We draw support from various decision of Honorable High courts in 346 ITR 343 ( Bom) , 345 ITR 223 ( del ) and also of the Honourable supreme court Anirudhsinhji Karansinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 where in hon. Supreme court held as under :- ― 13. It has been stated by Wade and Forsyth in 'Administrative Law', 7th Edition at pages 358 and 359 under the heading 'SURRENDER, ABDICATION....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perations without formation of requisite belief. Power and authority given to the authorities must be exercised in terms of the statute and not contrary to and in violation of jurisdictional requirements. Power, as given, also imposes an obligation on the authorities to satisfy jurisdictional pre-conditions for the exercise of power to be held to be valid and not bad and contrary to law..." Above passage and ingeminated words makes it luculent that ". Power and authority given to the authorities must be exercised in terms of the statute and not contrary to and in violation of jurisdictional requirements. Power, as given, also imposes an obligation on the authorities to satisfy jurisdictional pre-conditions for the exercise of power to be held to be valid and not bad and contrary to law" which fits in present facts fully. On jurisdictional fact , in recent decision of Madras high court in case of Karti Chidambram (2/11/2018) has succinctly observed that: "168. From the above judgments, it could be deduced that existence of jurisdictional fact is a sine qua non for exercise of power. A jurisdictional fact is one on existence or non;existence of which depends jurisdi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he order." 8.2 Further my decision on incorrect applicability of section 68 of the act in present facts is supported by following chain of decisions which are respectfully applied and followed by the Tribunal: S.No. & Particulars / Title of decision Bench (citation / Ref. No./ Order No. Held (Gist in brief) Relevant para. 1. Babbal Bhatia A bench Delhi ITAT ITA 5430 &5432/Del/2011( 08/06/2018) Para 19 (Para 14 to 26) 2. Zaheer Abdulhamid Mulani SMC Pune Bench (Before Ms Sushma Chowla and Shri Anil Chaturvedi) ITA 862/Pun/2017 (31.08.2018) Para 13 3. Latif Ebrahim Patel Mumbai A bench ITA 7097/Mum/2013 (23.03.2018) Para 7 & Para 8 (Mumbai ITAT decisions in 164 ITD 296 & 160 ITD 605 followed) 4. Shamsher Singh Gill Delhi SMC Bench in ITA 2987/Del/2015 (28/02/2017) 4036/Del/2017 (14/12/2017) Para 4 to 7 6. Om Prakash Delhi E bench in ITA 1325/Del/2011 (11/08/2016) Para 5 to 8 7. Kamal Kumar Mishra Lucknow ITAT 143 ITD 686 Para 7 8. Sunil Vaid Delhi ITAT SMC bench in ITA 2414/Del/2016 (30/12/2016) Para 7 9. Vijay Kumar Prop. V.K. Medical Hall Delhi ITAT F bench ITA No. 2483/Del/2015 (27/11/2018) Para 13....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it Narain Aggarwal, ITA No. 560 of 2009, dt. 12.12.2012 2. CIT vs. Sudeep Goenka, ITA No. 468 of 2009, dt. 3.01.2013. 3. CIT vs. Anirudh Narain Aggarwal, ITA No. 195 of 2010, dt. 16.01.2013." It was pointed out that the same issue has been decided by the I.T.A.T. in assessee's own case in I.T.A.T. No. 1584/Del./2009 for the A.Y. 2002-03 vide order dated 13.11.2009, in assessee's favour (copy of the order was furnished which is placed on record) 12. We have considered the submissions of both the parties and gone through the material available on the record. In the present case, it is noticed that the assessee purchased the shares in earlier years which were shown as investment in the books of accounts and reflected in the "Asset Side" of the "Balance Sheet", out of those investments (copy which is placed at page no. 23 and 24 of the assessee's paper book), the assessee sold certain investments and accounted for the profit / loss and offered the same for taxation. In the present case, the amount in question was neither a loan or the deposit , it was also not on account of share application money, the said amount was on account of sale o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year 2004-05." The Hon'ble Delhi High Court in the case of Principal C.I.T. vs Jatin Investment Pvt. Ltd. [2017 ] TMI 342 (Delhi) held as follows :- "4. The ITAT agreed with the conclusions of the CIT (A) upon its independent examination of the record. It also discounted the Revenue's submissions that the investment shown in the book of accounts and reflected as assets in the side of the balance sheet, should have been properly treated and that in the absence of such treatment. Section 68 applies. The ITAT rejected this contention and held - based upon the principles enunciated in CIT v. Vishaf Holding & Capital Pvt. Ltd. (order of this Court dated 9.8.2010) that the invocation of Section'68 in the circumstances is unwarranted. 5. Learned counsel for the Revenue reiterated the grounds cited in some of the contentions made before the ITAT. Learned counsel especially emphasized on the submission that the incorrect reflection of the receipts in the balance sheet belied the true nature of the receipts as a justification for the application of Section 68. 6. The ITAT in our opinion quite correctly appreciated the law and its application by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Thus, in my considered opinion, the addition made u/s 68 of the Act of Rs. 23,51,714/- by the revenue is unsustainable." Sanjeev Jain Prop. M/s. S.K. Jewellers ITA No.3381/Del/2017 Assessment Year: 2013-14 DELHI BENCH 'G', NEW DELHI (date of order : 15.01.2019) Held "21. We find merit in the arguments advanced by the Ld. Counsel for the assessee that the shares have been sold at the rate as prevailing on the stock exchange at the time of sale and the share prices of all the scrip are closely monitored by the stock exchange and SEBI. Even if the prices have gone up artificially as alleged by the revenue authorities, however, there is no material to hold that the assessee was involved therein. It is also an admitted fact that although the Assessing Officer had made enquiries from various entities i.e. assessee's banker, depository, broker and the banker of M/s. TCL Technologies Limited, however, nothing adverse have been found. There is no adverse finding by SEBI in relation to the scrip in question has been given to the Assessing Officer. Further in response to notice u/s 131 Sh. Sachin Jain, Frenchise of M/s. Globe Capital Market Ltd, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....report of the Investigation Wing Kolkata which in turn is nothing but the narration of the statements recorded during the investigation and the AO was having in possession the statement of only Shri Anand Sharma. Therefore, all these proceedings conducted by the Investigation Wing Kolkata were at the back of the assessee and hence the statement which is the foundation of the report of the Investigation Wing Kolkata as well as the assessment order cannot be accepted in the absence of giving an opportunity of cross examination to the assessee. We find that the assessee has insisted for cross examination during the assessment proceedings and further during the appellate proceedings. The ld.CIT(A) even called for a remand report and directed the AO to allow cross examination to the assessee. However, the AO has expressed his inability to allow the assessee cross examination of the witnesses due to the reason that the witnesses belong to Kolkata and it is not possible for AO to make such arrangement. The ld. CIT(A) has finally denied the cross examination to the assessee by giving his finding in para 5.11 at page 188 already reproduced in the earlier part of this order and, therefore, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt order passed by the AO not sustainable. The ld. A/R has submitted that Coordinate Bench of this Tribunal in the case of DCIT vs. Shri Prateek Kothari vide order dated 16th December, 2012 in ITA No. 159/JP/2016 has considered this issue in para 2.8 to 2.11 as under :- "2.8 We have heard the rival contentions and perused the material available on record. The transaction under question relates to unsecured loans taken by the assessee amounting to Rs. 1 Crores from M/s Mehul Gems Pvt Ltd during the impunged assessment year and not accepting the said loan transaction as a genuine transaction by the Assessing officer and the resultant addition made under section 68 of the Act. Undisputedly, the primary onus to establish genuineness of the loan transaction is on the assessee. In the instant case, the assessee has provided the necessary explanation, furnished documentary evidence in terms of tax filings, affidavits and confirmation of the Directors, bank statements of the lender, balance sheet of the lender company, and an independent confirmation has also been obtained by the Assessing officer to satisfy the cardinal test of identity, creditworthiness and genuineness of the lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te concerned. In the present case, no such circumstances are warranted as in the list of beneficiaries to whom accommodation entries were provided by the said group categorically contains the name and address of the assessee. Further the group has categorically admitted to providing of accommodation entries of unsecured loans through various benami concerns." The AO further relied upon the decision of Hon'ble Supreme Court in he case of C. Vasantlal & Co. Vs. CIT 45 ITR 206(SC) and Hon'ble Rajasthan High Court in case of Rameshwarlal Mali vs. CIT 256 ITR 536(Raj.) among others. In this regard, it was submitted by the assessee that if the entries and material are gathered behind the back of the assessee and if the AO proposes to act on such material as he might have gathered as a result of his private enquiries, he must disclose all such material to the assessee and also allow the cross examination and if this is not done, the principles of natural justice stand violated. 2.9 In light of above discussions, in our view, the crux of the issue at hand is that whether the principle of natural justice stand violated in the instant case. In other words, where the AO does....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cilitate assessment even by private enquiry. But, if he desires to use the material so collected, the assessee must be informed about the material and given adequate opportunity to explain it. The statements made by Praveen Jain and group were material on which the IT authorities could act provided the material was disclosed and the assessee had an opportunity to render their explanation in that regard." The Hon'ble Supreme Court in case of Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) (Copy at Case Law PB 585-591) has held that "whether there was any material evidence to justify the findings of the Tribunal that the amount of Rs. 1,07,350 said to have been remitted by Tilokchand from Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter, dated 18-2- 1955 said to have been addressed by the manager of the bank to the ITO. Now it is difficult to see how this letter could at all be relied upon by the Tribunal as a material piece of evidence supportive of its finding. In the first place, this letter was not disclosed to the assessee by the ITO and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd various persons and an opportunity to cross examine such persons though he specifically asked for such documents and cross examination. On the other hand, the burden was sought to be shifted on the ITA No. 159/JP/16 The ACIT, Central -2, Jaipur vs. M/s Prateek Kothari, Jaipur 21 assessee by the A.O. It is clear case where the principle of natural justice stand violated and the additions made under section 68 therefore are unsustainable in the eye of law and we hereby delete the same. The order of the ld CIT(A) is accordingly confirmed and the ground of the Revenue is dismissed." Thus when the assessee has specifically asked for cross examination of the witnesses whose statements were relied upon by the AO, then the denial of the opportunity to cross examine would certainly in violation of principles of natural justice and consequently renders the assessment order based on such statement as not sustainable in law. Hence in view of the facts and circumstances of the case where the assessee has repeatedly requested and demanded the cross examination of the witnesses whose statements were relied upon by the AO in the assessment order and further the report of the DDIT Inves....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The impugned order of the AO fails to discuss this aspect although it has noticed the submission of learned counsel for the appellants that the said statements had been retracted as they had been given under threat and coercion. In order to determine whether the claim of the appellants that they were subjected to torture, threat and coercion was a credible one, the SD sought to have permitted the appellants to cross-examine the officers of the ED who recorded the statements. As regards Prem Singh, his statement is stated to have been recorded by A.K. Narang, Assistant Director. The statement of Rajendra Singh was recorded by Devender Malhotra. Neither of these officers was tendered for cross-examination. In the considered view of the Court, in the context of the specific allegation that the retracted confessional statements were obtained under torture and coercion, that aspect ought to have been examined by the SD. In the circumstances, the reasons given by the SD in the impugned AO for disallowing the request of the appellants for cross-examination of the ED officials only because it would tantamount to "further delay in finalising the proceeding" were not tenable or justified. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based; (b) An opportunity to defend himself by cross-examining the witnesses produced against him and by examining himself or any other witnesses in support of his defense; and finally (c ) An opportunity to make his representation as to why the proposed punishment should not be inflicted on him.‖ iv). The Hon‟ble Supreme Court of India in Ayubkhan Noorkhan Pathan Vs. The State of Maharashtra & Ors. Decided on 08.11.2012, Civil Appeal No. 7728 of 2012, after relying upon various authoritative judgments, has observed that crossexamination is an integral part and parcel of the Principles of Natural Justice. It held that Cross-examination is one part of the principles of natural justice. (v) A Constitution Bench of the Hon‟ble Supreme Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, has held that the Principle of Natural Justice require that a party be given the opportunity to adduce all relevant evidence upo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a, namely, no prejudice has been caused to the appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review." ix). The Hon‟ble Supreme Court of India in New India Assurance Company Ltd., v. Nusli Neville Wadia & Anr., AIR 2008 SC 876, while considering a case under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, held that though the statute may not provide for crossexamination, the same being a part of Principles of Natural Justice should be held to be an indefeasible right. It was held as follows:- ―If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross-examine. The witness who intends to prove the said fact has the right to cross-examine the witness. This may not be provided by under the statute, but it being a part of the principle of natural justice should be held to be indefeasible right" x). The Hon‟ble Supreme Court in Needle Industries (India) Ltd. & Ors. v. N.I.N.I.H. Ltd. & Ors.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....term capital gain of the assessee bogus. v. Whether the disclosure of some other persons as their undisclosed income of Long-term capital gain affects the case of the assessee also. vi. Whether de hors all the above facts addition in the hands of the assessee u/s 68 of long term capital gain can be made. Thus, it is apparent that the assessee has not been granted an opportunity of the cross-examination of Sri R. K. Kedia and Shri Manish Arora. The learned authorised representative has relied upon the decision of the Hon'ble Supreme Court where in relying on case of state of Madhya Pradesh vs. Chintaman sadashiv Waishampayan AIR 1961 SC 1623 wherein in para number 11, It has been held referring another decision in Union of India vs. TR Varma ―stating it broadly and without intending it to be exhaustive, it may be observed that the rules of natural justice require that the party should have the opportunity of producing all relevant evidence on which he relies, that the evidences of the appellant should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no material should be relied on a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld have gone before the Commissioner Appeals to agitate this issue of cross-examination and therefore the opportunity was available to the assessee at that particular point of proceedings. In the present case, assessee has also raised the same issue before the learned CIT A that crossexamination has not been provided to the assessee despite asking for the same. The learned CIT A has also brushed aside the above argument of the assessee without giving any plausible reason. Therefore, when the assessee has not exhausted all the judicial process before reaching to the higher forum, but has bypassed them by invoking the different rights, then in such circumstances, the violation of the principles of natural justice, such as not granting of opportunity of the crossexamination, becomes any regularity and not an illegality. However, when the assessee has exhausted all the remedies available to him by exercising his right of the judicial process, then in such circumstances violation of the principle of natural justice, such as not granting an opportunity of cross-examination of the witness becomes an illegality. Therefore, in such circumstances, the order/addition made based on the statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee to crossexamine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 66. The ld. DR has strongly emphasized on the evidentiary value of the statement recorded u/s 132(4) of the Act and has relied upon several judicial decisions to support his contentions. The ld. DR further relied upon the provisions of section 132(4A) of the Act and 292C of the Act. These sections read as under: 70. It can be seen from the above chart that the case in which the presumption was available, the Revenue accepted what was returned by Shri R.K. Miglani and on the strength of his statement that the documents seized from his premises belong to distilleries, the additions have been made as unexplained expenditure/contribution to UPDA. 71. It is well settled that only the person competent to give evidence on the truthfulness of the contents of the document is writer thereof. So, unless and until the contents of the documents are p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts and wanted to crossexamine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority." 15. We, accordingly, respectfully following decision of Hon'ble Supreme Court in the case of Andaman Timber Industries versus CCE (supra) allow appeal of assessee on legal ground raised in Ground 2(c), and quash and set-aside the assessment order so passed. 15.1 As we have allowed assessee's appeal on Ground 2(c), other grounds raised by assessee becomes academic in nature which do not require any adjudication at this stage. Recent coordinate and division Pune bench ITAT decision in case of Brijendra Nath Agarwal (ITA 1666/Pun/2015) date of order: 29/11/2018 has held as under: "The issue which arises in the present appeal in such scenario, is whether re-assessment proceedings which have been completed against assessee, can stand in the eyes of law, where (a) documents ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(Inv). In any case, the investigation was carried out not in the hands of assessee but in the hands of other person, so once the assessee asks that the documents be issued to it on which reliance is placed upon for reopening the assessment, then it was incumbent upon the Assessing Officer to provide the same to the assessee in order to enable the assessee to peruse the same and then point out whether by relying on the said documents, the re-assessment has been validly reopened. May be, the letter which is forwarded by DDIT(Inv) to the Assessing Officer is an internal document and the Assessing Officer has provided gist of the same to the assessee. However, there are other documents the assessee has asked for i.e. copies of page No.6 to 15 of bundle No.1 seized from the office of CIIL, Bhosari, the details of Directors of the companies as mentioned in the said letter. In addition, the assessee had sought crossexamination of different persons whose statements / materials seized from them were being relied upon. However, we have already made reference to the said documents in paras 15, 17 and 18 hereinabove. The assessee has time and again asked for the copies of said documents but t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was forwarded by DDIT(Inv). The perusal of assessment order reflects that the Assessing Officer has elaborately referred to the contents of said letter and relied upon the investigation carried out by DDIT(Inv) in order to reopen the assessment in the case of assessee. In the totality of the above said facts and circumstances, where the assessee has been denied copy of statement recorded and copy of letter issued by DDIT(Inv), which has been extensively relied upon by the Assessing Officer to record reasons for reopening the assessment and failure of Assessing Officer in not providing cross-examination of witnesses in order to enable the assessee to meet the case of both reopening and also the assessment being carried out against the assessee on the basis of such statements, violates the basic fundamental principle of natural justice and in such scenario, the assessment which has been completed against the assessee cannot stand. Accordingly, we hold so. 24. The Hon'ble Supreme Court in GKN Driveshafts India Ltd. Vs. ITO (supra) has held that it is incumbent upon the Assessing Officer to provide an opportunity to the assessee to submit his objections to reopening of as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount only that Ld AO has chosen not to supply any back material referred in reasons recorded namely investigation wing report letter etc and even cross examination is never offered with reference to statement of searched person if any , so entire proceedings are bad in law. Recently Delhi ITAT A bench decision in case of Ashtech Industries Private Limited (20/12/2018) has clearly held that "We further note that AO supplied the reasons recorded (without approval) to assessee (as placed in paper book before us) which were objected before the AO in detailed manner vide objection letter dated 27.04.2016 in which note worthy aspect is assessee specifically sought from AO copies of back material referred in reasons including investigation wing report/letter, seized documents etc referred therein, AO without confronting any back material as evident from objection disposal order dated 17.05.2016 rejected assessee's objection challenging reopening action. In various letters placed in paper book and referred in written submission before us, it was specifically asked to AO during assessment proceedings to confront the back material as referred in reasons recorded namely in l....