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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI
`SMC' BENCH, NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA No. 4565/DEL/2018
[Assessment Year: 2014-15]
ANUBHAV JAIN Vs. I.T.O, WARD 35(5)
18/3, RAJPUR ROAD, NEW DELHI
CIVIL LINES,
DELHI
(PAN: AICPJ9132G)
[Appellant] [Respondent]
ITA No. 4566/DEL/2018
[Assessment Year: 2014-15]
ASHISH JAIN Vs. I.T.O, WARD 35(4)
18/3, RAJPUR ROAD, NEW DELHI
CIVIL LINES,
DELHI
(PAN: AFOPJ5271P)
[Appellant] [Respondent]
Assessee by : Shri Pranshu Goel, CA
Revenue by : Shri SL Anuragi, Sr. DR.
ORDER
These appeals by the different assessees are preferred against
the respective orders of the Ld. Commissioner of Income Tax
[Appeals] 12, New Delhi both dated 13.04.2018 pertaining to
assessment year 2014-15. Since the grounds raised in both the
appeals are common and identical, hence, the appeals were heard
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together and are being disposed of by this common order for the
sake of convenience, by dealing with ITA No. 4565/Del/2018 (AY
2014-15) Anubhav Jain vs. ITO. In both the appeals the
assessee has raised as many 05 grounds of appeal. But at the
time of hearing, Ld. A.R. for the assessee has only argued the
ground no. 3.2 which is reproduced as under:-
"3.2 That the order passed by the Hon'ble CIT(A)
upholding the order of the Ld. AO is bad in law
and liable to be quashed as the Hon'ble
CIT(A) and the Ld. AO placed reliance on
statement of some person(s) without
providing any opportunity to the appellant to
cross-examine the same."
2. Brief facts of the case are that assessee filed his e-return of
income on 30.6.2014 declaring total income of Rs. 6,24,370/- after
claiming deduction under Chapter VI-A of Rs. 1,01,196/-. This
return was revised on 22.4.2015 declaring total income of Rs.
6,26,250/-. The case of the assessee was selected for scrutiny
through CASS for reason "Suspicion long term capital gain or
shares". Notice u/s. 143(2) of the Income Tax Act, 1961 (in short
"Act") was issued on 17.8.2016. Thereafter, notice u/s. 142(1) of
the Act dated 14.9.2016 was issued. In response to the same, the
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A.R. for the assessee attended the proceedings from time to time
and furnished various details / documents, as called for from time to
time and verified it. Thereafter, the AO completed the assessment
u/s. 143(3) of the Act at an income of Rs. 25,73,338/-. Against the
assessment order, the Assessee appealed before the Ld. CIT(A) who
vide his impugned order dated 13.4.2018 has dismissed the appeal
of the assessee. Aggrieved with the order of the Ld. CIT(A),
assessee appealed before the Tribunal.
3. During the hearing, Ld. A.R. for the assessee draw my
attention towards the Assessment Order page no. 6 para 13 in
which the AO has himself reproduced the submission of the
assessee submitted vide assessee's reply dated 7.12.2016
requesting therein to allow the assessee to cross examine the
source on the basis of which such an opinion has been formed. he
further submitted that AO has not considered this point while
passing the assessment order. Further he draw my attention
towards page no. 7 of the Ld. CIT(A)'s order para no. 13 mentioning
the assessee's reply dated 7.12.2016 as made before the AO, as
aforesaid, which was also not considered by the Ld. CIT(A). He
further draw my attention towards page no. 24 of the Ld. CIT(A)'s
order wherein it was specifically mentioned that the assessee is
specifically asked for copies of the statements of Sh. Vikram Kayan
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and also seeks cross examination of Sh. Vikram Kayan, but not
considered the said request of the assessee. Further, it was
submitted that vide ground no. 5 raised before the Ld. CIT(A)
assessee has challenged the order of the AO by stating that the
addition made by the AO is untenable in the eyes of law having
been made without providing opportunity to cross examine the
persons on the basis of whose statements the allegations have been
made against the assessee and without following the principle of
natural justice. He further submitted that Ld. CIT(A) has not
adjudicated this ground and summarily dismissed the appeal of the
assessee by upholding the assessment order. He further submitted
that Finally, he submitted that this addition in dispute has been
made only on the statement of Sh. Vikrant Kayan without providing
any opportunity to the assessee to cross examine the same, which
is violation of principle of natural justice. He further submitted that
exactly on the similar facts and circumstances the ITAT, SMC, Delhi
Bench vide its order dated 06.11.2018 passed in ITA No.
3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs.
ITO the SMC Bench, Delhi has considered the statement of Vikrant
Kayan and has held that impugned addition was made on the
statement of Sh. Vikrant Kayan without providing any opportunity to
the assessee to cross examine the same and Ld. CIT(A) has not
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considered the same, which is in violation of principle of natural
justice and against the law settled in the decision rendered by the
Hon'ble Supreme Court of India in the case of Andaman Timber vs.
CIT decided in Civil Appeal No. 4228 of 2006. Hence, he requested
to follow the SMC Bench decision in the case of Jyoti Gupta (Supra)
and allow the appeals of the assessee.
4. Ld. DR relied upon the orders of the authorities below.
5. I have heard both the parties and perused the records,
especially the assessment as well as impugned order and the reply
filed by the assessee before the AO in response to the show cause
notice. I find from the Assessment Order page no. 6 para 13 in
which the AO has himself reproduced the submission of the
assessee submitted vide assessee's reply dated 7.12.2016
requesting therein to allow the assessee to cross examine the
source on the basis of which such an opinion has been formed which
was not considered by the AO while passing the assessment order.
I further note from the order of the Ld. CIT(A)'s in para no. 13
wherein the assessee's reply dated 7.12.2016 as made before the
AO, as aforesaid was reproduced and also not considered by the Ld.
CIT(A). I further find that at page no. 24 of the Ld. CIT(A)'s order, it
was mentioned that the assessee was specifically asked for copies of
the statements of Sh. Vikram Kayan and also seeks cross
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examination of Sh. Vikram Kayan, but not considered the said plea
of the assessee, despite request. I further find that in ground no. 5
raised before the Ld. CIT(A), wherein the assessee has challenged
the order of the AO by stating that the addition made by the AO is
untenable in the eyes of law having been made without providing
opportunity to cross examine the persons on the basis of whose
statements the allegations have been made against the assessee
and without following the principle of natural justice. I note that
Ld. CIT(A) has also not adjudicated the ground no. 5 raised before
him and summarily dismissed the appeal of the assessee by
upholding the assessment order. Moreover, the addition has been
made only on the statement of Sh. Vikrant Kayan without providing
the copy of statement of Sh. Vikrant Kayan and without providing
any opportunity to the assessee to cross examine the same, which
is in violation of principle of natural justice. I further note that
exactly on the similar facts and circumstances the ITAT, SMC, Delhi
Bench vide its order dated 06.11.2018 passed in ITA No.
3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs.
ITO wherein, the SMC Bench has considered the statement of
Vikrant Kayan and has held that since the impugned addition was
made on the statement of Sh. Vikrant Kayan without providing any
opportunity to the assessee to cross examine the same and Ld.
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CIT(A) has not considered the same ground, which is in violation of
principle of natural justice and against the law laid down by the
Hon'ble Supreme Court of India in the case of Andaman Timber vs.
CIT decided in Civil Appeal No. 4228 of 2006. For the sake of
convenience, I am reproducing the relevant portion of the ITAT,
SMC, Delhi Bench vide its order dated 06.11.2018 passed in ITA No.
3510/Del/2018 (AY 2014-15) in the case of Smt. Jyoti Gupta vs.
ITO as under:-
"13. Merely on the strength of statement of
third party i.e. Shri Vikrant Kayan
cannot justify the impugned additions.
Moreso, when specific request was made
by the assessee for allowing cross
examination was denied by the
Assessing Officer. The first appellate
authority also did not consider it fit to
allow cross-examination. This is in
gross violation of the principles of
natural justice and against the ratio laid
down by the Hon'ble Supreme Court in
the case of Andaman Timber Vs. CIT
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Civil Appeal No. 4228 OF 2006 wherein it has
been held as under:
"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
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specifically mentioned that such an
opportunity was sought by the assessee.
However, no such opportunity was
granted and the aforesaid plea is not
even dealt with by the Adjudicating
Authority. As far as the Tribunal is
concerned, we find that rejection of this
plea is totally untenable. The Tribunal
has simply stated that cross-examination
of the said dealers could not have
brought out any material which would
not be in possession of the appellant
themselves to explain as to why their
ex-factory prices remain static. It was
not for the Tribunal to have guess work
as to for what purposes the appellant
wanted to cross-examine those dealers
and what extraction the appellant
wanted from them. As mentioned above,
the appellant had contested the
truthfulness of the statements of these
two witnesses and wanted to discredit
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their testimony for which purpose it
wanted to avail the opportunity of cross-
examination. That apart, the
Adjudicating Authority simply relied upon
the price list as maintained at the depot
to determine the price for the purpose of
levy of excise duty. Whether the goods
were, in fact, sold to the said
dealers/witnesses at the price which is
mentioned in the price list itself could be
the subject matter of cross-examination.
Therefore, it was not for the Adjudicating
Authority to presuppose as to what could
be the subject matter of the cross-
examination and make the remarks as
mentioned above. We may also point out
that on an earlier occasion when the
matter came before this Court in Civil
Appeal No. 2216 of 2000, order dated
17.03.2005 was passed remitting the
case back to the Tribunal with the
directions to decide the appeal on merits
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giving its reasons for accepting or
rejecting the submissions. In view the
above, we are of the opinion that if the
testimony of these two witnesses is
discredited, there was no material with
the Department on the basis of which it
could justify its action, as the statement
of the aforesaid two witnesses was the
only basis of issuing the Show Cause.
We, thus, set aside the impugned order
as passed by the Tribunal and allow this
appeal."
14. Considering the facts of the case in
totality, I do not find any merit in the
impugned additions. The findings of the
CIT(A) are accordingly set aside. The
Assessing Officer is directed to allow the
claim of exemption u/s 10(38) of the
Act."
6. Keeping in view of the facts and circumstances of the
present case and respectfully following the order of the
Tribunal, SMC Bench, Delhi in the case of Smt. Jyoti Gutpa
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vs. ITO (Supra) and in view of the law settled by the
Hon'ble Supreme Court of India in the case of Andaman
Timber vs. CIT (Supra), on identical facts and
circumstances, the addition in dispute is deleted and the
appeal of the assessee is allowed.
7. Following the consistent view as taken in ITA No.
4565/Del/2018 (AY 2014-15) in the case of Anubhav Jain
vs. ITO, as aforesaid, the addition involved in ITA No.
4566/Del/2018 (AY 2014-15) in the case of Ashish Jain vs.
ITO is also deleted and this appeal is also allowed.
8. In the result, both the appeals filed by the different assessees
are allowed.
The order pronounced on 26.11.2018.
Sd/-
[H.S. SIDHU]
JUDICIAL MEMBER
Dated: 26th November, 2018
SR BHATNAGAR
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A) Asst. Registrar,
5. DR ITAT, New Delhi
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