TaxTMI 
TaxTMI 
2025 (8) TMI 1824
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....ng addition of Rs. 45,00,000/- as unexplained investment on account of alleged cash on-money paid for purchase of flat no. 3, PH-2, Bloc KD, Cosmos Hawaiian, Thane (W) from Cosmos Group, not appreciating that when such addition was without any evidence and ignoring all the contentions made in the course of appeal proceedings by the appellant. The addition Rs. 45,00,000/- as undisclosed investment is not warranted and is required to be deleted. 3. The Hon CIT(A) erred in dismissing the ground of the appellant that the information relied upon by the Id AO i.e. the statements of the members of the Cosmos Group was without affording your appellant with opportunity to cross examine the said persons, inspite of specific request for the same and thereby the salient principles of equity, fair play and natural justice were breached and for this reason no cognizance should be taken of such adverse information, if any, unless reasonable opportunity of cross examination was granted to the appellant. 4. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal/relief claimed at any time before the decision of the appeal." Brief f....
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....- made by the Ld.AO is based on an excel sheet prepared by the Investigation wing, and no further verification was carried out by the Ld.AO, neither before issuance of notice u/s.148 nor during the assessment proceedings. The Ld.AR thus emphasised that, based on borrowed satisfaction reopening of the assessment was done in the case of assessee for the year under consideration. 4.1 The Ld.AR submitted that, statements of the member of Cosmos Group recorded by the Investigation wing does not implicate the assessee having made any payment of on-money in cash as alleged by the authorities below. He submitted that there is no evidences against assessee with the revenue authorities to establish that on-money at Rs. 45,00,000/- was paid in cash by the assessee to the Cosmos Group. The Ld.AR emphasised that, the assessing officer solely relied on the information provided by the Investigation wing without independent opinion having established that income escaped assessment the year under consideration. 4.2 The Ld.AR further submitted that, cross-examination of the persons whose statement were used to make addition in the hands of the assessee was been provided at any stage by the Ld.....
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....rmation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action ca....
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....noted that, the assessee was not granted opportunity to cross examine the promoter and the directors of the Cosmos Group whose statement formed basis and was used against assessee to make addition. Hon'ble Supreme Court in case of Andman Timbers Industries vs. CCE reported in (2015) 62 taxmann.com 3 observed as under : "6. According to us, 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 wa....