TaxTMI 
TaxTMI 
2022 (12) TMI 495
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....er recording the reasons to believe which are extracted as under: In this case, the assessee had filed his return of income for A.Y. 2012-13 on 28.09.2012 declaring total income of Rs.5,04,100/- the return was been processed u/s.143(1) of the Act on 15.01.2013 determining total income of Rs.5,04,100/-. As per information received from the Assistant Commissioner of Income-tax Central Circle 2(4), Ahmedabad a search operation u/s.132 of the Act was carried on 15.10.2013 in the case of DHARMDEV INFRSTRUCTURE wherein incriminating evidences/document were seized in respect of ON MONEY received from various persons/parties/customers. During the course of the hearing before the Settlement Commission the Company Dharmdev Infrastructure Ltd. admitted receipt of Rs.85.45 Crore from various persons/parties as on money. The assessee Shri Kiritbhai K Gajjar has also advanced cash and booked/purchased the property from M/s.Dharamdev Infrastructure Ltd and paid on money of Rs.4,00,000/- As the said payment of Rs.4,00,000/- has not been recorded by the assessee in his books of accounts/purchase deed, the same is unexplained investment which required to be disallowed and added to the total in....
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....ed during the search proceedings at the premises of "Dharmdev Infrastructure Ltd". The AO further noted that all the banking transaction towards the purchase of the flat shown by the assessee were matching with the ledger copy recovered during the course of search except the cash payment of 4 for lakhs only. The AO further held that the amount of consideration shown in the sale deed was less than the amount of consideration paid by the assessee to the builder. Accordingly, the assessee held that the proceedings under section 147 of the Act are valid. 5. Aggrieved assessee preferred an appeal before the learned CIT-A 6. The assessee before the learned CIT-A vide letter dated 22nd October 2018 contended that the AO has not brought anything on record suggesting that the disclosure made by the company namely "Dharmdev Infrastructure Ltd" was representing the on money paid by the assessee in cash. As such the AO has not established any vital nexus and the live link between the income admitted by the "Dharmdev Infrastructure Ltd" before the settlement commission viz a viz the cash payment made by the assessee for Rs. 4 lakhs towards the purchase of flat which was not accounted. The ass....
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.... case I find that there is no substance in the contentions of the appellant. It is a fact that incriminating documents in respect of "On Money" were found from Dharamdev Group during search proceedings. Further, it is a fact that Dharamdev Group in their petition before Settlement Commission has conceded that they received Rs, 35.45 crores on account of "On Money" . from various customers. Thus, there is no substance in the contention of the appellant that this is not a conclusive proof for payment "On Money" by the appellant. Further, there is no substance in the contention of the appellant that he was not provided the document on the basis on which the additions has been made./The AO has reproduced the ledger account of the appellant which was obtained from the Dharamdev Group in the assessment order. Case laws relied on by the appellant do not apply to the present case as the facts are different. 8. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 9. The learned AR before us filed a paper book running from pages 1 to 50 and reiterated the contentions made before the authorities below whereas the learned DR before us vehemently supported t....
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....f the assessee has escaped assessment while recording the reasons to believe. In holding so, we draw support and guidance from the judgement of Hon'ble Gujarat High Court in case of Zaveri & Company (P.) Ltd. Vs. DCIT reported in [2021] 133 taxmann.com 397 (Guj.), where in similar facts & circumstances it was held as under: The Assessing Officer has sought to reopen the assessment for assessment year 2012-13 of the petitioner on the basis of fresh material having been received as a result of the search made by the office of Deputy Director (Investigation) conducted at the premises of SS and JS and as a result of the investigation carried out during the search proceedings conducted by the office of Pr. Director (Investigation) at the premises of NJ and his associates that the petitioner-company was one of the beneficiaries of the accommodation entries as the petitioner had entered into the transactions in penny stock with two companies, which companies were used for bogus LTCG and contrived losses. The Assessing Officer had also received specific information from the said investigating wings outlining the systemic evasion of taxes by the petitioner and others, and had therefore re....
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....opy found from the premises of such party has drawn an inference that the assessee has made unaccounted investment of Rs. 3.85 lakhs in the purchase of the flat. As such, the copy of the ledger was reflecting the cash and cheque payment by the assessee against the purchase of flat aggregating to Rs.22 lakhs whereas the assessee shown to have made the payment of Rs.18.15 lakhs only which was duly reflected in the books of accounts. The AO also noted that such party namely "Dharmdev Infrastructure Ltd" has also admitted to have received on money to the tune of Rs.85.45 crores before the settlement commission. As such, the builder "Dharmdev Infrastructure Ltd" in the disclosure made before the settlement commission has computed the receipt of on money from the assessee to the tune of Rs.4 lakhs in cash based on such ledger. Thus the AO concluded that information received was reliable and tangible. Thus the AO made the addition of Rs.3.85 lakhs to the total income of the assessee being difference between the sale shown by the builder (Rs. 22 lakh) and investment shown by the assessee (Rs. 18.15). 13. Aggrieved assessee preferred an appeal to the learned CIT-A who confirmed the order o....
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....ng Rs. 4 lakh from the appellant assessee. There is no ambiguity to the fact that the copy of the ledger recovered from the premises of the search party i.e. seller and further admission by the such party before the settlement commission is a vital piece of evidence which strongly suggests that there was unaccounted cash payment of Rs.3.85 lakhs by the assessee to the party against the purchase of flats. It can also be said that there are enough materials and circumstantial evidences suggesting the unaccounted cash payment of Rs.3.85 lakhs. 17.1 However, the controversy arises whether document found from the premises of 3rd party and the disclosure made by such 3rd party before the settlement commission can be used against the assessee without affording the opportunity of cross-examination. Admittedly, the assessee while raising the objection against the initiation of the proceedings under section 147 of the Act has made the following submission before the AO: Please provide copy of material/records on the basis of which you form a belief that assessee had paid on money of Rs.4 Lakh. In case any statement is made by any party of Dharmadev Infrasture Ltd, in this regards copy of ....
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.... cross examination is provided to the assessee. For this proposition we find support from the judgment of Hon'ble Apex Court in the case of M/s Andaman Timber Industries Vs. CCE (supra) wherein Hon'ble Court held as under: Not allowing the assessee to cross-examine 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 inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, 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. As far as the Tribunal is concerned, we....
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....g the decisions referred hereinabove, are of the considered view in the instant case also assessee has not been provided any opportunity of cross examination of the parties who have stated to have received 'on-money' from sale of land. We, thus, set aside the finding of Ld. CIT(A) and delete the addition of Rs.36,46,175/- and allow ground no.4 raised by the assessee. Ground No.5 & 6 raised by the assessee becomes merely academic in nature as we have already deleted the addition allowing ground no.4 of the assessee. Ground no.7 is general in nature which needs no adjudication. 17.4 From the above, it is revealed that the opportunity of cross-examination was sine quo non before making any addition to the total income of the assessee based on the 3rd party information especially in the circumstances when the assessee time and again has demanded for such cross examination opportunity. Thus, in the absence of such cross-examination opportunity, to our understanding the addition is not sustainable despite the fact that there are material evidence available before the AO which are against the assessee. 17.5 A question also arises whether the revenue should be directed to provide the opp....