2008 (2) TMI 442

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....rch and seizure operation under section 132 of Income-tax Act, 1961 was carried out on 22/23-10-1997 in the case of M/s. Nishachandra Steel & Chemicals (P.) Ltd. and M/s. Chowgle Loha & Rasayan (P.) Ltd. The assessment of the main group was completed by the DCIT, Central Circle 38, Mumbai. On the basis of the information from the DCIT, the Assessing Officer DCIT 8(2) has initiated proceedings under section 158BD of the Income-tax Act by issuing notice dated 10-4-2002. The assessee did not file the return for the block period within the time stipulated in the notice. Return for the block period was filed on 11-2-2004 declaring undisclosed income at Rs. 49,80,831 along with challan for payment of tax and the assessment was completed on 29-4-2....

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.... 17 of the order. CIT(A) has given a finding that profit arising therefrom, i.e., income offered in the undisclosed purchases are required to be excluded from the eligible amount which in effect is a paper profit. Aggrieved by the above order of the CIT(A), assessee is in appeal. 5. Contesting the above findings of the CIT(A), the AR argued that the statements of the three parties have not been made available to the assessee which fact is recorded by the CIT(A) but not considered. As part of natural justice assessee should be provided with the statements of the parties which are used against it and consequently the action of the Assessing Officer cannot be supported. The assessee insisted that ground No. 1 on this issue should be conside....

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.... 158BD in the light of the decision of the Hon'ble Supreme Court quoted. 8. We have considered the issue. As far as ground No. 1 is concerned, the assessee's claims are to be accepted as there is already a finding by the CIT(A) that the statements are not provided to the assessee. As the statements recorded from third parties on which the Assessing Officer relied for the purpose of assessment has not been provided, the order of the Assessing Officer is bad in law to that extent. Therefore, the assessment order passed by the Assessing Officer is set aside. Consequently, the Assessing Officer is directed to redo the assessment according to the law by providing the statements to the assessee and fulfilling the rules of natural justice. Whil....