TaxTMI 
TaxTMI 
2024 (7) TMI 958
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....portunity to examine and cross examine the material evidences which is void, unjustified and unlawful under the Indian Evidence Act. 2.1 Apropos Ground Nos. 1 & 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) has dismissed the appeal of the assessee by observing as under:- 5.4 After considering all the facts, the undersigned has come to conclusion that:- a) It is admitted fact that there was credit of alleged amount of Rs 17,00,000/ to the account of the appellant through RTGS b) The appellant during the assessment proceedings failed to provide any documentary evidences iro advance receipt of the said amount for the purpose of Dhaniya purchase. c) Further, as per the records M/s Bright Corporation deals in business of Gold sales, then how will the agricultural commodity (i.e. Dhaniya) will be of any use for it d) No Prudent business entity will enter into such huge amount of transaction without executing any document in this regard. e) Moreover, during the investigation made on Bright Corporation, the Investigation wing based on the Statement recorded u/s 131 of Shri Samsun Paul Gohil, has conclusivel....
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.... admitted of entering into the alleged transaction. The said portion of the reply of the appellant during the assessment proceedings in response to notice dated 13.11.2019 is being reproduced as under:- "M/s Bright Corporation has transferred a sum of Rs. 17,00,000/- in our bank account through bank RTGS on 13th November 2016 for the purpose of procuring good quality of Dhaniya commodity on their behalf. Due to sharp decrease in market price and non- availability of good quality of Dhaniya commodity in the surrounding market the contract for which the said amount was received could not be executed hence the said amount so received was revert back through bank RTGS 1.0. Rs. 9,80,000/- on 20th January 2017 and Rs. 7,20,000/- on 21st January 2017 in two installments which can be verified from the bank statement of HDFC CC Account (Account No. 07808660000037)". c) Accordingly, I find that the contention raised by the appellant in this regard in not tenable hence rejected. d) In these facts and circumstances, I am constrained to be in agreement with the finding of the Assessing Officer and hold that the appellant is unable to substantiate its claims and is not....
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....s trade advance for purchase of Dhaniya and subsequently when the deal did not materialize the same was return on 20.01.2017 and 21.01.2017, and made addition u/s 68 of the IT Act treating the same as unexplained deposit being an accommodation entry. The AO completed the assessment on 09.12.2019 determining total income of Rs. 29,00,750/- which included the addition of Rs. 17,00,000/- as discussed above. 2.3 Aggrieved with the order of the AO, the assessee went in appeal before the ld CIT(A) who dismissed the appeal of the assessee without considering the reply of the assessee in proper perspective. The ld. AR of the assessee, before the ld. CIT(A) vehemently argued that addition cannot be made in the hands of the assessee on the basis of third party statement i.e. statement of Shri Samsun Paul Gohil without providing the copy of statement to the assessee and allowing opportunity of cross examination of Shri Samsun Paul Gohil. The ld. CIT(A) has not considered the plea of the assessee and confirmed the action of the AO 2.4 Now Aggrieved with the order of the ld. CIT(A) the assessee is in appeal before the Tribunal with the prayer that it is a genuine transaction through banki....
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....ish all the material of the basis of which the deposit of Rs. 17,00,000/- was treated as accommodation entry. In this regard, it is noted that assessee furnished letter on 02.12.2019 before the AO, copy of which is reproduced below :- Date :- 02/12/2019 To, The Income Tax Officer, Ward 1(3), Kota - Rajasthan Ref: DEEPAK KUMAR SHAH PAN: ADDPK1529N Subject: Reply to Notice u/s 142(1) of the Income Tax Act, 1961 for the Assessment Year 2017-2018. Dear Sir, In response to your notice dated 30.11.2019 your goodself asked the reasons of receipt of Rs. 17,00,000 received from M/s. M/s Bright corporation, Ahmedabad along with documentary evidences. As mentioned in your letter" you did not clarify as to for what reason the said amount was deposited in your account & why not deposited in other person's account." In response to above we informed your goodself that M/s Bright corporation having PAN AAPFB7686Q and assessed by the Income Tax Department, Ahmedabad. M/s Bright corporation has transferred a sum of Rs. 17,00,000 in our bank account through bank RTGS on 13th Novemb....
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....oration/ Shri Samsun Paul Gohil. However, the AO did not accede to the request of the assessee and completed the assessment. Thus the action of the AO is in violation of the principles of natural justice. The Bench feels that the AO was required to furnish the following to the assess before completion of the assessment :- A. The grounds and evidence on which the deposit of Rs. 17,00,000/- was treated as accommodation entry. B. Copy of statement of Shri Samsun Paul Gohil should have been supplied to the assessee who is alleged to have admitted the transactions as accommodation entry. C. Opportunity should have been allowed to cross examine Shri Samsun Paul Gohil. It is noted that it is settled principles of law that material/statement gathered at the back of the assessee cannot be used against the assessee unless the same are tested by cross examination. Thus it is case where principles of equity and justice have not been followed. The assessee was unable to furnish defense in the absence of non-furnishing of the material and statement by the AO. The following case laws are quoted in support :- 1. The Apex Court has observed that not allowing c....
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.... can effectively be done by the Assessing Officer. The reference applications are disposed of as above leaving it to the Tribunal to pass consequential orders. 3. PRAKASH CHAND NAHTA vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF MADHYA PRADESH) (2008) 301 ITR 0134 : Assessment-Validity-Opportunity of being heard vis-a-vis statements of third party-Unaccounted silver ornaments and utensils were found and seized during the search at the assessee's premises-Assessee explained that the said silver items were purchased from one R & Co.-AO made addition to the income of the assessee after recording the statement of M, proprietor of R & Co., behind the back of the assessee-Not justified-AO has heavily relied upon the statement of M and has ignored the subsequent affidavit filed by M which is in variance of his original statement-Since the statement of M was used against the assessee and an affidavit was filed controverting the same, it was obligatory on the part of the AO to allow the prayer of assessee for cross-examination of M-AO having not summoned M under s. 131 in spite of the request of the assessee, evidence of M could not have been used against the assessee-Ther....
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....OURT OF CALCUTTA) 210 ITR 0103 Assessee showing a gross profit rate of 5.2%-Revenue being of the opinion that assessee inflated purchases, called in evidence one S from whom assessee made purchases and applied G.P. rate of 30%-S denied having made any sales to assessee in the face of earlier affidavits confirming such sales- Statement of S not furnished to assessee nor opportunity to cross-examine him given-Cross examination is sine qua non of the due process of taking evidence and no adverse inference can be drawn against a party unless that party is put on notice of the case made out against him-Matter remanded for cross-examination of S with opportunity to assessee to furnish evidence to rebut the evidence of S. 6. KALRA GLUE FACTORY. vs. SALES TAX TRIBUNAL & ORS. (SUPREME COURT OF INDIA) 167 ITR 0498 Statement which was not tested by cross examination is not good evidence. From the above, it is felt that there is no accommodation entry in the hands of the assessee. The amount of Rs. 17,00,000/- was received on 13.11.2016 through RTGS in the bank account of the assessee maintained with HDFC Bank A/c no. 07808660000037 at Ramganj Mandi - 326519, Kota....
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.... 42,00,00,000/- required to be considered in the hands of Samsun Paul Gohil. The department must have taken action in the hands of Samsun Paul Gohil. Once the amount remitted to the assessee stood already considered for tax purposes in the hands of Shri Samsun Paul Gohil then there was no case for treating the same amount as unexplained in the hands of the assessee and taxing it for the second time. Thus the addition in the hands of the assessee has been made under the wrong perception which deserves to be deleted. The ld. CIT(A) failed to appreciate the facts of the case in correct perspective. The main issue of source of Rs. 17,00,000/- being Bright corporation/Samsun Paul Gohil was lost site off and uncalled for attention was centered on the trade deal of Dhaniya. It is noted that the information provided to the AO vide the DDIT wing itself disclosed the source of the deposit in the hands of the assessee, hence the same could not be treated as unexplained u/s 68 of the IT Act. Hence, the Bench draws strength from the following case laws. ''1. CIT vs. Ayachi Chandrasekhar Narsangji, 42 Taxmann.com 251,69,52,894/- (Guj) :- When the department has accepted the fac....