TaxTMI 
TaxTMI 
2025 (10) TMI 852
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....ome tax assessment proceedings as invalid, without appreciating the correct legal provision on this issue". 2. "Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) was right in deleting an addition of Rs. 4,63,40,539/-, holding that the Rules of Evidence and Indian Evidence Act contemplating grant of cross examination of the witnesses shall strictly apply to the facts of the present case". 3. "Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) was right in deleting an addition of Rs. 4,63,40,539/-, disregarding the factual findings made by the Assessing Officer, in the Assessment order"." 3. The brief facts of the case are that the assessee is a private limited company engaged in the business of manufacturing and wholesale trading of gold jewellery and ornaments. The assessee filed its return of income under section 139(1) of the Act, declaring a total income of Rs. 15,04,83,700/-. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, the Ld. AO noted that a search and seizure operation had been conducted on M/s Mohinder Singh Jewellers, Amritsar on ....
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....essee's total income as undisclosed sales. Aggrieved by this addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that the assessee was not afforded a reasonable opportunity to cross-examine the third-party evidence found during the search. It was further noted that the virtual hearing provided by the AO was not granted within a reasonable time frame, resulting in a gross violation of the principles of natural justice. After considering the facts and submissions, the Ld. CIT(A) passed a detailed and speaking order, deleting the entire addition solely on the ground of violation of natural justice, as the assessee was denied the opportunity to cross-examine the third-party evidence. Being aggrieved, the revenue has preferred the present appeal before us. 4. The Ld. DR argued that the Ld. CIT(A) erred in deleting the entire addition merely on the ground of lack of cross-examination, without appreciating the merits of the case. The Ld. DR contended that such deletion was unjustified and liable to be reversed. He further invited our attention to pages 22 to 24 of the impugned appellate order, wherein the relevant paragraphs are extracted bel....
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....ments of those witnesses were made the basis of the order, was a serious flaw which nullified the order since it was a violation of the principles of natural justice Also, in the case of Principal Commissioner of Income. Tax (Central) vs Oriental Power Cables Ltd reported in [2022] 143 com 371 (SC) has held that failure to give the assessee the right to cross-examine witnesses whose statements are relied on, results in a breach of principles of natural justice. It is a serious flaw which renders the order a nullity. 47. In the case of Kishinchand Chellaram (AIR 1980 14 SC 2117) the Hon'ble Supreme Court of India on the aspect of cross-examination held as follows "It is true that the proceedings under the Income Tax law are not governed by the strict rules of evidence and therefore it might be said that even without calling the Manager of the Barik in evidence to prove this letter, it could be taken into account as evidence. But before the Income Tax Authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the Manager of the Bank with refere....
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....ssed supra, there is no material tactually or technically at all against the assessee and the AO having talked to find any infirmity / with the documents Med by the assessee/lenders to prove the transactions as discussed supra no adverse view was legally tenable." 5. The Ld.DR in argument stated that the Ld.AO, on the basis of the report from investigation department of Income tax, considered the transaction in excel sheet in the WhatsApp chart is over and above the normal sale transactions. She stands fully in favour of the order of Ld.AO. the relevant paragraph of the impugned assessment order are reproduced as below:- "4.6.1.3. In the above statement, Sh. Parvinder Singh has submitted that entries in the above table pertain to the purchases made by him with M/s Master Chains Pvt Ltd. The entries against which "BANK" is written can be found in the ledger account of M/s Master Chains Pvt Ltd in the books of both M/s Mohinder Singh Jewellers and M/s Mohinder Singh Jewellers Pvt Ltd. However, other entries will not match because these entries have not been booked on the day when the purchase has been made. Rather Sh. Parvinder Singh has engaged into speculation transacti....
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....ed sales in the hand of Master chain Pvt. Ltd." 6. The Ld.AR argued and filed the paper book containing pages 1 to 191 which is kept in record. The Ld.AR stated that the assessee has discharged its onus by submitting the ledger, bank statement, invoices, GST return and the TCS was also deducted related to these transactions. He further stated that the Ld.CIT(A) during passing order considered the fact of the case and the transactions of the assessee with the party. The assessee never denied the transaction with the parties whereas he submitted the statement related to the transaction with contain sales total of 12533.92 gms. He further stated that the assessee has requested for personal hearing through video conferencing (VC) to present the oral arguments in support of the claim. On assessee's request, a personal hearing through VC was scheduled on 12/03/2024 on 11.30 AM and the notice was duly issued for VC on 11/03/2024 evening. Even for less than a day the hearing was fixed hurriedly and the reasonable opportunity for the assessee was denied. The assessee was not allowed any advance intimation to prepare for the same. In clause (xxiv) of section 144B of the Act requires that ....
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....le invoices to M/s Mohinder Singh Jewellers. The tabulated chart is duly annexed here below:- Sales Details Monhinder Singh Jewellers (MSJ) & Mohinder Singh Jewellers Private Limited (MSJPL) Party Bill Date Bill No. Quantity (22 Kt) Taxable Value GST TCS Bill Value Paper Book Pg No. of Invoice MSJ 30-06-2021 SG-512 393.67 17,70,098 53,103 1,823 18,25,024 162 MSJ 06-07-2021 SG-549 633.19 28,23,458 84,704 29,08,162 163 MSJ 09-07-2021 SG-575 128.99 5,85,590 17,568 6,03,158 164 MSJ 21-07-2021 SG-653 1440.51 65,60,083 1,96,802 67,56,885 165 MSJ 31-08-2021 SG-1043 909.3 41,15,946 1,23,478 42,39,424 166 MSJ 08-09-2021 SG-1108 247.58 10,99,307 32,979 11,32,286 167 MSJ 08-09-2021 SG-1109 158.16 7,02,260 21,068 7,23,328 In Hand MSJ 20-09-2021 SG-1183 183.9 8,01,090 24,033 8,25,123 168 MSJ 28-09-2021 SG-1285 648.7 28,19,075 84,572 29,03,647 169 MSJ ....
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....tements, GST returns, and TCS compliance. The Ld. CIT(A), after detailed examination, found that there was a clear violation of the principles of natural justice. The right to cross-examine witnesses whose statements are relied upon by the revenue is a fundamental safeguard recognized in several judicial pronouncements, including: Andaman Timber Industries v. CCE [(2016) 38 GSTR 117 (SC)], CIT v. Odeon Builders Pvt. Ltd. [(2019) 418 ITR 315 (SC)], and PCIT (Central) v. Oriental Power Cables Ltd. [(2022) 143 taxmann.com 371 (SC)]. These judgments categorically hold that any order passed without granting an opportunity for cross-examination of third-party witnesses constitutes a serious breach of natural justice, rendering the assessment invalid. The Ld. CIT(A) has also observed that the virtual hearing scheduled by the AO on 12/03/2024 was fixed at an unreasonably short notice, thereby denying the assessee a fair opportunity to present its case. We further note that the assessee had duly disclosed the transactions with M/s Mohinder Singh Jewellers and M/s Mohinder Singh Jewellers Pvt. Ltd. in its books of accounts, supported by sales invoices aggr....