TaxTMI 
TaxTMI 
2026 (7) TMI 672
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....ly attached. 2. Ld. Authorised Representative (A R) for the Appellant submitted that the allegation is purely on the basis of the statement of Shri Asit B Doshi, the alleged Benamidar in the matter. No evidence has been provided to prove that the alleged illegitimate and ill-gotten cash belonged to the Appellant. The Initiating Officer (IO) did not allow any opportunity of cross examination of Shri Asit B Doshi or that of Shri Mangilal, who had allegedly contacted Shri Asit B. Doshi, for depositing the old currency notes, as stated by Shri Ashit B. Doshi in his statement under Section 131 of the Income Tax Act, 1961. Thus, the PAO has been passed without proper inquiry or verification and without allowing any opportunity of being heard or cross-examinations of other parties alleged to have been involved and therefore, the Order is bad in law. 3. Ld. A R for the Appellant argued that the various entities controlled by Shri Ashit B Doshi, which had purchased gold from Shree Nakoda Gold, were having credit facilities from the banks. This point can be verified from the bank account of Jay Ambe Enterprise and Aman Enterprise. In this context, it was submitted that the banks extend....
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....hri Mangilal till these proceedings. The Appellant did not pay any cash to any Shri Mangilal, the Respondent No.2 or Shri Pradeep Pawar or anyone. The Appellant entered into the transaction because of his relative Shri Jayantilal Porwar, who however died subsequently. 6. Ld. A R for the Appellant submitted that a small and medium sized businessman (SME segment) cannot do a KYC akin to what bankers do today. In fact, if he so does, he will not survive in business. It is extremely pertinent to note that the statement of the Respondent No. 2 recorded on 01.12.2016 does not contain the Appellant's name nor any direct allegation of receiving cash directly or indirectly from the Appellant or even a claim or whisper that cash was received from the Appellant. This issue itself is very vital because neither does Shri Asit Doshi (Respondent No. 2) states that he got the cash from the Appellant nor does Shri Mangilal states so (in fact his statement was not recorded by the IO) and the Appellant also does not state that he gave any cash to Shri Asit Doshi or to any Shri Mangilal at any time. In blatant violation of the rules of natural justice, the IO did not provide the Appellant cross....
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.... after deducting around Rs.1,85,000/- as commission @5%, he gave RTGS entries of around Rs.37,50,000/- to M/s. Shree Nakoda Gold (Rs.17,88,989/- from M/s. Aman Enterprises and Rs.18,94,823/- and Rs. 53,191/- from M/s. Jai Ambe Enterprise). 9. Ld. Counsel for the Respondent stated that on verification of the details filed by the Beneficiary Owner (BO) (M/s Shree Nakoda Gold), it is seen that it tried to coverup the benami transaction as genuine by submitting copy of invoices, ledgers and bank account statements. Ld. Counsel argued that from reading of Section 2(9) and 2(26) of PBPTA, it is clear that transaction entered into by Shri Ashit Balwant Doshi with M/s Shree Nakoda Gold is a benami transaction under Section 2(9) of PBPTA, as the cash for such deposit did not belong to Shri Ashit Balwant Doshi and was provided by M/s Shree Nakoda Gold. This cash was deposited into bank accounts of the entities managed and controlled by Shri Ashit Balwant Doshi and transferred back to the bank account of the actual beneficiary i.e. M/s Shree Nakoda Gold. So, in view of the above, Shri Ashit Balwant Doshi was treated as a Benamidar and M/s Shree Nakoda Gold was treated as a beneficiary as t....
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....ions as he did not have any stake in the seized money as he had already taken his 5% share. Therefore, it appears that the contention of the Initiating Officer for treating the transaction as benami under the PBPTA appears to be reasonable and supportable. Ld. Counsel therefore pleaded to dismiss the Appeal. 11. We have considered the rival submissions and the material on record. First and foremost, we observe that the Impugned Order under consideration, was issued on 27.09.2018 in the Ref. No. R-149/2017. Three other Orders were issued by the Ld. AA on 27.09.2018 in Ref. No. R-146/2017, in Ref. No. R-151/2017 and in Ref. No. R-148/2017. We further observe that in all the four References there are striking similarities in the facts of each case. While the Benamidar in all four cases has been Shri Asit B Doshi, the alleged Beneficial Owners are Firms viz M/s Lakshya Jewels in Ref. No. R-151/2017, M/s Vrajendra Enterprise in Ref. No. R-146/2017, M/s Shree Nakoda Gold in Ref. No. R-149/2017 and M/s Raksha Bullion in Ref. No. 148/2017. We have decided to deal with each of the four References separately because of separate PAO issued by the IO, distinct Impugned Orders issued by the ....
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....ount of Rs. 39,50,000/- from Shri Mangilal for giving RTGS entry to the Appellant, after deducting Rs. 1,85,000/- as commission at the rate of 5 percent. Therefore, in so far as transfer of Rs. 37,50,000/- as RTGS from the aforementioned three Firms at the behest of Shri Asit B Doshi to the bank account of the Appellant Firm is not in dispute. 14. The Appellant has furnished the explanation for the aforementioned transfers through the RTGS, as being proceeds from sale of gold. In this regard, the Appellant has referred to the Invoices No. 493 & 494 dated 17.11.2016 for sale of 615.400 gms. of gold bars and 584.600 gms. gold bars respectively. The Appellant has further referred to Invoice No. 495 dated 17.11.2016 for 1200 gms. of silver bars. The Respondent has also alleged that the rates given by the Appellant on the said bills are very different from the prevailing rates in the market on 17.11.2016 when the Appellant has claimed to have issued the bills. The Respondent has further argued that as per the Indian Bullion and Jewellers Association Website, the rates were more than from those which are reflected on the bills. Moreover, the weights of gold bars which were supposedly ....
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....reme Court in Kanungo & Company vs. Collector of Customs & Ors. [AIR 1972 SC 2136], which has laid down that in all cases cross-examination of a witness may not be necessary may be quoted as follows: "12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our-opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly, we hold that there is no force in the third contention of the appellant." 18. Another decision of the Hon'ble Supreme Court in Dharampal Satyapal Ltd. v. CCE, (....
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....udice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of 'prejudice'. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing." 19. The Judgment of the Hon'ble Supreme Court in M/s Telestar Travels Pvt. Ltd. vs. Special Director of Enforcement, [2013 AIR SCW 1304], has held that denial of request to cross-examine the witnesses by the Ld. Adjudicating Authority does not violate the principles of Natural Justice. "20. Coming to the case at hand, the Adjudicating Authority has mainly relied upon the statements of the appellants and the documents seized in the course of the search of their premises. But there is no dispute that apart from what was seized from the business premises of the appellants the Adjudicating Authority also placed reliance upon documents produced by Miss Anita Chotrani and Mr. Raut. These documents were, it is admitted disclosed to the appellants who were permitted to inspect the same. The production of the documents....
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....udice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person. 42.5. The "prejudice" exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice." 21. On perusal of these judgments, it would be reasonable to make the following inferences: (a) There does not appear to be any straight-jacket framework as to when cross-examination can be granted. To lay down any rigid rules as to when in compliance of principles of natural justice, opportunity to cross-examine should be given is almost impossible. It all depends on the subject matter. In the application of the concept of fair play there has to be flexibility. The application of the principles of natural justice depends on the facts and circumstances of each case. (b) While it is true that quasi-judicial proceedings are also subject to adherence to the principles of natural justice, the need for providing the opportunity of c....