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M/s P.Mittal Manufacturing Pvt. Ltd., B-542, 2nd Floor, New Friends Colony, New Delhi vs. Income Tax Officer, Ward 19(2), C.R. Building, New Delhi – 110 002
July, 23rd 2019

Referred Sections:
Section 68 of the Act.
Sub-section(3)
Section 23
Section 61
Section 132(4A)of the Act
Section 292C of the Act.
Section 147/148 of the Act
Section 143(3) of the Act.

Referred Cases / Judgments:
Amitabh Bansal vs. Income Tax Officer, Ward 46(4), New Delhi (2019) 102 taxmann.com 229.
Andaman Timber Industries vs. CCE
CIT vs. Ashwani Gupta, 322 ITR 396 (Delhi)
H.R. Mehta vs. ACIT, 387 ITR 561 (Bombay)
DCIT vs. Shri Prateek Kothari vide order dated 16th December, 2012 in ITA No. 159/JP/2016
C. Vasantlal & Co. Vs. CIT 45 ITR 206(SC)
Rameshwarlal Mali vs. CIT 256 ITR 536(Raj.)
ACIT, Central -2, Jaipur vs. M/s Prateek Kothari,
In Prem Singh Vs. Special Director, Enforcement Directorate, CRL A. 276 of 2008,
Bhattacharya Vs. Union of India 159 (2009) DLT
Ahluwalia Vs. State of Punjab & Ors. 2012 (10) SCALE 46
M. Pirai Choodi vs. ITO 334 ITR 262,

 

                 IN THE INCOME TAX APPELLATE TRIBUNAL
                     DELHI BENCHES "SMC" : DELHI

               BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER


                          ITA.No.6906/Del./2018
                       Assessment Years 2010-2011


M/S P.MITTAL MANUFACTURING               INCOME TAX OFFICER,
PVT. LTD.,                               WARD 19(2),
B-542, 2ND FLOOR, NEW FRIENDS vs.        C.R. BUILDING,
COLONY,                                  NEW DELHI ­ 110 002
NEW DELHI
(PAN: AAECP8061H)
(Appellant)                              (Respondent)

                      For Assessee : Shri Anmol Sinha, Adv. & Sh. Ashvini
                                     Kumar, Adv.
                       For Revenue : Shri S.L. Anuragi, Sr. DR.


                                  ORDER


     This appeal is filed by the assessee against the impugned order of the
Ld. CIT(A)-7, New Delhi, dated 24.8.2018 for the A.Y. 2010-11.

2.   At the time of hearing, Ld. Counsel for the assessee stated that the
exactly similar issue involved in the present appeal has been decided and
adjudicated in favour of the assessee by the decision of the ITAT, Delhi SMC
decision in the case of Amitabh Bansal vs. Income Tax Officer, Ward 46(4),
New Delhi (2019) 102 taxmann.com 229. He has filed the copy of the same
decision before the Bench as well as the copy of the impugned order of the
Ld. CIT(A). He also filed a Paper Book before the Bench, which is containing
pages 1-96 in which he has attached so may documentary evidences
supporting the claim of the assessee. He especially drew my attention
towards page no. 29 and stated that where revenue relies on statements of
                                         2


certain persons to implicate an assessee, principles of cross examination
have to be invariably followed as not providing opportunity to cross examine
is violative of principles of natural justice.    He further stated that where
revenue strongly relies on statements of certain persons to implicate an
assessee, principles of cross examination have to be invariably followed if
truth and justice need to be found out. He stated that the answer has been
given by the Bench       positive in the case Amitabh Bansal vs. Income Tax
Officer, Ward 46(4), New Delhi (2019) 102 taxmann.com 229 (Supra) and
therefore, requested to follow the same ratio in the case of the               assessee
and addition in dispute may be deleted and appeal of the assessee               may be
allowed.

3.    On the contrary, Ld. DR relied upon the orders passed by the Revenue
Authorities.   He stated that the addition in dispute has been made on the
basis of the information received from the Investigation Wing, after
recording the valid reasons with the approval of the Competent Authority.
Therefore, no irregularity has been committed by the               AO as well as Ld.
CIT(A), hence, he requested that the appeal filed by the Assessee may be
dismissed.

4.    I have heard both the parties and perused the records especially the
orders     passed   by   the   revenue   authorities   as   well    as   the    various
judgments/decisions relied by the Ld. Counsel for the assessee especially the
ITAT, Delhi SMC decision in the case of Amitabh Bansal vs. Income Tax
Officer, Ward 46(4), New Delhi (2019) 102 taxmann.com 229, a copy
thereof    placed at page no. 29 of the Paper Book in which exactly similar
issue has been dealt by the Tribunal and decided in favour of the assessee
by holding that when revenue strongly relies on statements of certain
persons to implicate an assessee, principle of cross examination has to
invariably followed if truth and justice needs to be found out, which has not
been done in the case of the assessee.       The relevant portion of the Tribunal
                                    3


in the case of Amitabh Bansal vs. Income Tax Officer, Ward 46(4), New
Delhi (2019) 102 taxmann.com 229of has been reproduced as under:-

                     "8.6 Now adverting to second issue framed above on
                     impact of cross examination, I strongly rely on the
                     following string of decisions of various courts to hold
                     that when revenue strongly relies on statements of
                     certain persons to implicate an assessee, principle of
                     cross examination has to invariably followed if truth
                     and justice needs to be found out. Following recent
                     jurisprudence as relied by Ld AR is supportive to my
                     view:
                     IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR
                     BENCHES, JAIPUR
                     ITA No. 997 to 1002/JP/2018 & 1119/JP/2018
                     M/s. Kota Dall Mill
                     Date of Pronouncement : 31/12/2018.
                     11.1. Even otherwise, the assessment order is solely
                     based on the report of the Investigation Wing
                     Kolkata which in turn is nothing but the narration of
                     the statements recorded during the investigation and
                     the AO was having in possession the statement of
                     only Shri Anand Sharma. Therefore, all these
                     proceedings conducted by the Investigation Wing
                     Kolkata were at the back of the assessee and hence
                     the statement which is the foundation of the report
                     of the Investigation Wing Kolkata as well as the
                     assessment order cannot be accepted in the absence
                     of giving an opportunity of cross examination to the
                     assessee.
                     We find that the assessee has insisted for cross
                     examination during the assessment proceedings and
                     further during the appellate proceedings. The
                     ld.CIT(A) even called for a remand report and
                     directed the AO to allow cross examination to the
                     assessee. However, the AO has expressed his
                     inability to allow the assessee cross examination of
                     the witnesses due to the reason that the witnesses
                     belong to Kolkata and it is not possible for AO to
                     make such arrangement. The ld. CIT(A) has finally
               4


denied the cross examination to the assessee by
giving his finding in para 5.11 at page 188 already
reproduced in the earlier part of this order and,
therefore, the only reason for denial of cross
examination by the ld.CIT(A) is that the statements
are so vocal and undeniable that cross examination
of such accommodation entry provided by thousands
of beneficiaries across India is neither practicable nor
viable and therefore uncalled for. We find that the
assessee has demanded the cross examination only
in respect of the alleged transactions of loans and
not for the entire business of the entry providers
providing the bogus entries. Undisputedly, the
statement of Shri Anand Sharma was recorded by
the Investigation Wing Kolkata at the back of the
assessee, even the proceedings by the Investigation
were conducted at the back of the assessee,
therefore, the said statement of Shri Anand Sharma
cannot be the sole basis of assessment without
giving an opportunity of cross examination to the
assessee. The Hon'ble Supreme Court in the case of
Andaman Timber Industries vs. CCE (supra) while
dealing with the issue of violation of principles of
natural justice for not providing the opportunity of
cross   examination      of   the    witnesses    whose
statements were relied on by the AO has held in para
6 to 9 as under :-
Once the assessee has disputed the correctness of
the statement and wanted to cross examine the
witness which was not given by the AO as well as ld.
CIT(A), then the orders passed based on such
statement are not sustainable in law. The Hon'ble
Delhi High Court in case of CIT vs. Ashwani Gupta,
322 ITR 396 (Delhi) while dealing with the issue of
not providing the opportunity to cross examine the
witnesses has held in para 5 to 7 as under :-
Thus the Hon'ble High Court has held that once there
is a violation of principles of natural justice inasmuch
as seized material is not provided to the assessee
nor is cross examination of the person on whose
statement the AO relied upon, granted, then, such
deficiencies would amount to denial of opportunity
and consequently would be fatal to the proceedings.
               5


The Hon'ble Bombay High Court in the case of H.R.
Mehta vs. ACIT, 387 ITR 561 (Bombay) has also
considered the issue of not providing opportunity of
cross examination in para 11 to 17 as under :-
Thus the denial of opportunity to cross examine was
considered by the Hon'ble High Court which goes to
the root of the matter and strikes at the very
foundation of the assessment and, therefore, renders
the assessment order passed by the AO not
sustainable. The ld. A/R has submitted that
Coordinate Bench of this Tribunal in the case of DCIT
vs. Shri Prateek Kothari vide order dated 16th
December, 2012 in ITA No. 159/JP/2016 has
considered this issue in para 2.8 to 2.11 as under :-
"2.8 We have heard the rival contentions and
perused the material available on record. The
transaction under question relates to unsecured
loans taken by the assessee amounting to Rs 1
Crores from M/s Mehul Gems Pvt Ltd during the
impunged assessment year and not accepting the
said loan transaction as a genuine transaction by the
Assessing officer and the resultant addition made
under section 68 of the Act. Undisputedly, the
primary onus to establish genuineness of the loan
transaction is on the assessee. In the instant case,
the    assessee     has     provided   the    necessary
explanation, furnished documentary evidence in
terms of tax filings, affidavits and confirmation of the
Directors, bank statements of the lender, balance
sheet of the lender company, and an independent
confirmation has also been obtained by the
Assessing officer to satisfy the cardinal test of
identity, creditworthiness and genuineness of the
loan transaction. However, the Assessing officer has
not given any finding in respect of such explanation,
documentary evidence as well as independent
confirmation. Apparently, the reason for not
accepting the same is that the Assessing officer was
in receipt of certain information from the
investigation wing of the tax department as per
which the transaction under consideration is a bogus
loan transaction. The said information received from
the investigation wing thus overweighed the mind of
              6


the Assessing officer. The Assessing officer stated
that the primary onus is on the assessee to establish
the genuineness of the transaction claimed by it and
if the investigation done by the department leads to
doubt regarding the genuineness of the transactions,
it is incumbent on the assessee to produce the
parties alongwith necessary documents to establish
the genuineness of the transaction. In response, the
assessee submitted that Shri Bhanwarlal Jain is not
known to him and regarding various incriminating
documentary evidences seized during the course of
search and statements recorded of Shri Bhanwarlal
Jain and other persons, he specifically requested the
AO to provide copies of such incriminating
documents and statement of all various persons
recorded in this regard and provide an opportunity to
the assessee to cross examine such persons.
However, the AO didn't provide to the assessee
copies of such incriminating documents and
statements of various persons recorded and allow
the cross-examination of any of these persons. While
doing so, the AO stated that "in his statements,
Bhanwarlal Jain had described that they are indulged
in providing accommodation entries of bogus
unsecured loans and advances through various
Benami concerns (70) operated and managed by
them. This admission automatically makes all the
transactions done by them as mere paper
transactions and in these circumstances, further as
per the information name and address of assessee
and     the     Benami    Concern    through    which
accommodation entry of unsecured loans was
provided is appearing in the list of beneficiaries to
whom the said Group has provided. This admission is
sufficient to reject the contentions of the asseesse."
Further, regarding cross examination, the AO stated
that "the right of cross examination is not an
absolute     right   and   it  depends     upon    the
circumstances of each case and also on the statute
concerned.
In the present case, no such circumstances are
warranted as in the list of beneficiaries to whom
accommodation entries were provided by the said
              7


group categorically contains the name and address
of the assessee. Further the group has categorically
admitted to providing of accommodation entries of
unsecured loans through various benami concerns."
The AO further relied upon the decision of Hon'ble
Supreme Court in the case of C. Vasantlal & Co. Vs.
CIT 45 ITR 206(SC) and Hon'ble Rajasthan High
Court in case of Rameshwarlal Mali vs. CIT 256 ITR
536(Raj.) among others. In this regard, it was
submitted by the assessee that if the entries and
material are gathered behind the back of the
assessee and if the AO proposes to act on such
material as he might have gathered as a result of his
private enquiries, he must disclose all such material
to the assessee and also allow the cross examination
and if this is not done, the principles of natural
justice stand violated.
2.9 In light of above discussions, in our view, the
crux of the issue at hand is that whether the
principle of natural justice stand violated in the
instant case. In other words, where the AO doesn't
want to accept the explanation of the assessee and
the    documentation    furnished    regarding    the
genuineness of the loan transaction and instead
wants to rely upon the information independently
received from the investigation wing of the
department in respect of investigation carried out at
a third party, can the said information be used
against the assessee without sharing            such
information with the assessee and allowing an
opportunity to the assessee to examine such
information and explain its position especially when
the assessee has requested the same to the
Assessing officer.
2.10 In this regard, the Hon'ble Supreme Court in
the case of Dhakeswari Cotton Mills Ltd. v. CIT
(1954) 26 ITR 775 (SC) (Copy at Case Law PB 812-
818) has held that "The rule of law on this subject
has been fairly and rightly stated by the Lahore High
Court in the case of Seth Gurmukh Sinqh where it
was stated that while proceeding under sub-section
(3) of section 23, the Income-tax Officer, though not
bound to rely on evidence produced by the assessee
               8


as he considers to be false, yet if he proposes to
make an estimate in disregard of that evidence, he
should in fairness disclose to the assessee the
material on which he is going to find that estimate;
and that in case he proposes to use against the
assessee the result of any private inquiries made by
him, he must communicate to the assessee the
substance of the information so proposed to be
utilized to such an extent as to put the assessee in
possession of full particulars of the case he is
expected to meet and that he should further give
him ample opportunity to meet it." It was held in
that case that "In this case we are of the opinion
that the Tribunal violated certain fundamental rules
of justice in reaching its conclusions. Firstly, it did
not disclose to the assessee what information had
been     supplied   to   it   by    the   departmental
representative. Next, it did not give any opportunity
to the company to rebut the material furnished to it
by him, and lastly, it declined to take all the material
that the assessee wanted to produce in support of its
case. The result is that the assessee had not had a
fair hearing."
The Hon'ble Supreme Court in case of C. Vasantlal &
Co. Vs. CIT 45 ITR 206 (SC) has held that "the ITO is
not bound by any technical rules of the law of
evidence. It is open to him to collect material to
facilitate assessment even by private enquiry. But, if
he desires to use the material so collected, the
assessee must be informed about the material and
given adequate opportunity to explain it. The
statements made by Praveen Jain and group were
material on which the IT authorities could act
provided the material was disclosed and the
assessee had an opportunity to render their
explanation in that regard."
The Hon'ble Supreme Court in case of Kishinchand
Chellaram v. CIT (1980) 125 ITR 713 (SC) (Copy at
Case Law PB 585-591) has held that "whether there
was any material evidence to justify the findings of
the Tribunal that the amount of Rs.1,07,350 said to
have been remitted by Tilokchand from Madras
represented the undisclosed income of the assessee.
               9







The only evidence on which the Tribunal could rely
for the purpose of arriving at this finding was the
letter, dated 18-2-1955 said to have been addressed
by the manager of the bank to the ITO. Now it is
difficult to see how this letter could at all be relied
upon by the Tribunal as a material piece of evidence
supportive of its finding. In the first place, this letter
was not disclosed to the assessee by the ITO and
even though the AAC reproduced an extract from it
in his order, he did not care to produce it before the
assessee or give a copy of it to the assessee. The
same position obtained also before the Tribunal and
the High Court and it was only when a supplemental
statement of the case was called for by this Court by
its order, dated 16-8-1979 that, according to the
ITO, this letter was traced by him and even then it
was not shown by him to the assessee but it was
forwarded to the Tribunal and it was for the first time
at the hearing before the Tribunal in regard to the
preparation of the supplemental statement of the
case that this letter was shown to the assessee. It
will, therefore, be seen that, even if we assume that
this letter was in fact addressed by the manager of
the bank to the ITO, no reliance could be placed
upon it, since it was not shown to the assessee until
at the stage of preparation of the supplemental
statement of the case and no opportunity to cross
examine the manager of the bank could in the
circumstances be sought or availed of by the
assessee. 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 bank 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 reference to the
statements made by him."
2.11 In light of above proposition in law and
especially taking into consideration the decision of
              10


the Hon'ble Supreme Court in case of C. Vasantlal &
Co. (supra) relied upon by the Revenue and which
actually supports the case of the assessee, in the
instant case, the assessment was completed by the
AO relying solely on the information received from
the investigation wing, statement recorded u/s
132(4) of Shri Bhanwarlal Jain and others, and
various incriminating documentary evidence found
from the search and seizure carried out by
Investigation Wing, Mumbai on the Shri Bhanwarlal
Jain group on 03.10.2013. It remains undisputed
that the assessee was never provided copies of such
incriminating documents and statements of Shri
Bhanwarlal Jain and various persons and an
opportunity to cross examine such persons though
he specifically asked for such documents and cross
examination. On the other hand, the burden was
sought to be shifted on the ITA No. 159/JP/16 The
ACIT, Central -2, Jaipur vs. M/s Prateek Kothari,
Jaipur 21 assessee by the A.O. It is clear case where
the principle of natural justice stand violated and the
additions made under section 68 therefore are
unsustainable in the eye of law and we hereby delete
the same. The order of the ld CIT(A) is accordingly
confirmed and the ground of the Revenue is
dismissed."
Thus when the assessee has specifically asked for
cross    examination    of   the    witnesses   whose
statements were relied upon by the AO, then the
denial of the opportunity to cross examine would
certainly in violation of principles of natural justice
and consequently renders the assessment order
based on such statement as not sustainable in law.
Hence in view of the facts and circumstances of the
case where the assessee has repeatedly requested
and demanded the cross examination of the
witnesses whose statements were relied upon by the
AO in the assessment order and further the report of
the DDIT Investigation Kolkata is also based on the
statement of such person then the denial of cross
examination by the AO as well as ld. CIT (A) despite
the fact that the assessee was ready to bear the cost
of the cross examination of the witnesses is a gross
               11


violation of principles of natural justice. Thus the
additions made by the AO on the basis of such
statement without any tangible material is not
sustainable in law and liable to be deleted.
Accordingly the addition made by the AO is also
deleted on merits apart from the legal issue decided
in favour of the assessee.
APPELLATE  TRIBUNAL,   FOREIGN              EXCHANGE
MANAGEMENT ACT AT NEW DELHI
Date of Decision:-13.04.2018
(1) FPA-FE-01/DLI/2018
Shri Ashwani Kumar Mehra ... Appellant
      Versus
Shri A.H. Khan
Directorate of Enforcement, Delhi ... Respondent
CORAM
JUSTICE MANMOHAN SINGH : CHAIRMAN
SHRI G.C. MISHRA : MEMBER
JUDGEMENT
FPA-FE-01/DLI/2018, FPA-FE-03/DLI/2018, FPA-FE-
04/DLI/2018 & FPA-FE-05/DLI/2018
"54. "The Honble Supreme Court of India in the
case of Ayaaubkhan Noorkhan Pathan v. State of
Maharashtra & others reported in (2013) 4 SCC 465,
has inter alia held that the opportunity of cross-
examination be made available, but it should be one
of effective cross-examination, so as to meet the
requirement of the principles of natural justice. In
the absence of such an opportunity, it cannot be held
that the matter has been decided in accordance with
law, as cross-examination is an integral part and
parcel of the principles of natural justice." The
Constitution Bench of the Honble Supreme Court of
India in State of M.P. v. Sadashiuva Vishampayan
reported in AIR 1961 SC 1623, has also confirmed
the principle that, the rules of natural justice require
             12


that a party should be given the opportunity of
cross-examining a witness. i) In Prem Singh Vs.
Special Director, Enforcement Directorate, CRL A.
276 of 2008, Delhi High Court, decided on
24.04.2014, whereby it was held that the denial of
right to cross examine the witnesses would cause
prejudice to the accused as statements of witnesses
are not substantive evidence in themselves. It was
held in the said judgement that delay is not a ground
for disallowing the opportunity to cross examine
witnesses. The court laid down that:
18. The impugned order of the AO fails to discuss
this aspect although it has noticed the submission of
learned counsel for the appellants that the said
statements had been retracted as they had been
given under threat and coercion. In order to
determine whether the claim of the appellants that
they were subjected to torture, threat and coercion
was a credible one, the SD sought to have permitted
the appellants to cross-examine the officers of the
ED who recorded the statements. As regards Prem
Singh, his statement is stated to have been recorded
by A.K. Narang, Assistant Director. The statement of
Rajendra Singh was recorded by Devender Malhotra.
Neither of these officers was tendered for cross-
examination. In the considered view of the Court, in
the context of the specific allegation that the
retracted confessional statements were obtained
under torture and coercion, that aspect ought to
have been examined by the SD. In the
circumstances, the reasons given by the SD in the
impugned AO for disallowing the request of the
appellants for cross-examination of the ED officials
only because it would tantamount to "further delay
in finalising the proceeding" were not tenable or
justified. The denial of cross examination of the ED
officials by the appellants indeed has caused them
severe prejudice since the ED was relying on the said
statements as if they were by themselves
substantive evidence."
 (iii) The Hon'ble High Court of Delhi in Devashis
Bhattacharya Vs. Union of India 159 (2009) DLT
              13


780, while deciding a case under Foreign Exchange
Regulation Act, 1973 had observed that:
18. It is well settled that where an action under
the statute entails civil consequences, then even if
an opportunity of being heard may not be explicitly
set out in the applicable legal provisions, the
adherence to the principles of natural justice has to
be read into such a statute.
19. There can be no dispute that the action
permitted under section 61 of the FERA, 1973
certainly results in drastic penal consequences... (iv)
The Hon'ble Supreme Court of India in Ramesh
Ahluwalia Vs. State of Punjab & Ors. 2012 (10)
SCALE 46 had observed that:
18. This is in conformity with the principle that
justice must not only be done. Actual and
demonstrable fair play must be the hallmark of the
proceedings and the decisions of the administrative
and quasi judicial courts. In particular, when the
decisions taken by these bodies are likely to cause
adverse civil consequences to the persons against
whom such decision are taken.
IV-A The Hon'ble Supreme Court of India in Ashiwin
S. Mehta and Anr. Vs. Union of India (UOI) and Ors.
(2012) 1 SCC 83 had observed that:
27. It is thus, trite that requirement of giving
reasonable opportunity of being heard before an
order is made by an administrative, quasi judicial or
judicial authority, particularly when such an order
entails adverse civil consequences, which would
include infraction of property, personal rights and
material deprivation for the party affected, cannot be
sacrificed at the alter of administrative exigency or
celerity.
IV-B The Constitutional Bench of the Hon'ble
Supreme Court of India in Khem Chand Vs. Union of
India AIR 1958 SC 300 has defined the meaning of
the term reasonable opportunity to include an
opportunity to defined by cross-examining the
              14


witnesses produced against the accused. The Hon'ble
court held that:
To summarize: the reasonable opportunity
envisaged by the provision under consideration
includes-
(a) An opportunity to deny his guilt and establish his
innocence, which he can only do if he is told what
the charges leveled against him are and the
allegations on which such charges are based;
(b) An opportunity to defend himself by cross-
examining the witnesses produced against him and
by examining himself or any other witnesses in
support of his defense; and finally
(c) An opportunity to make his representation as to
why the proposed punishment should not be inflicted
on him.
iv). The Honble Supreme Court of India in Ayubkhan
Noorkhan Pathan Vs. The State of Maharashtra &
Ors. Decided on 08.11.2012, Civil Appeal No. 7728
of 2012, after relying upon various authoritative
judgments, has observed that cross-examination is
an integral part and parcel of the Principles of
Natural Justice. It held that Cross-examination is one
part of the principles of natural justice.
(v) A Constitution Bench of the Honble Supreme
Court in State of M.P. v. Chintaman Sadashiva
Vaishampayan, AIR 1961 SC 1623, has held that the
Principle of Natural Justice require that a party be
given the opportunity to adduce all relevant evidence
upon which it relies, that evidence of the opposite
party be taken in his presence, and that he be given
the opportunity to crossexamine the witnesses
examined by that party. Not providing the said
opportunity to cross-examine is violative of the
Principles of Natural Justice.
(vi). In Lakshman Exports Ltd. v. Collector of Central
Excise, (2005) 10 SCC 634, the Apex Court, while
dealing with a case under the Central Excise Act,
1944, considered whether to grant permission for
cross-examination of a witness. In that case, the
              15


assessee had specifically asked to be allowed to
crossexamine the representatives of the concerned
firm, in order to establish that the goods in question
had been accounted for in the firms books of
accounts and excise duty had been paid thereof. The
Court held that such a request could not be turned
down, as the denial of the right to cross-examine,
would amount to a denial of the right to be heard i.e.
audi alteram partem.
(vii). In K.L. Tripathi v. State Bank of India & Ors.,
AIR 1984 SC 273, the Honble Supreme Court has
held that in order to sustain a complaint of violation
of the Principles of Natural Justice on the ground of
denial of opportunity to crossexamine, it must be
established that some prejudice has been caused to
the party by the procedure followed. A party which
does not want to controvert the veracity of the
evidence on record or does not want to controvert
the testimony gathered behind its back cannot
expect to succeed in any subsequent grievance
raised by him on the ground that no opportunity of
cross-examination was provided to him especially
when the same was not requested and especially
when there was no dispute regarding the veracity of
the statement.
(viii). In Rajiv Arora v. Union of India & Ors., AIR
2009 SC 1100, the Apex Court held:
Effective cross-examination could have been done
as regards the correctness or otherwise of the
report, if the contents of them were proved. The
principles analogous to the provisions of the Indian
Evidence Act as also the principles of natural justice
demand that the maker of the report should be
examined, save and except in cases where the facts
are admitted or the witnesses are not available for
cross-examination or similar situation. The High
Court in its impugned judgment proceeded to
consider the issue on a technical plea, namely, no
prejudice has been caused to the appellant by such
non-examination. If the basic principles of law have
not been complied with or there has been a gross
violation of the principles of natural justice, the High
               16


Court should have exercised its jurisdiction of judicial
review."
ix). The Honble Supreme Court of India in New
India Assurance Company Ltd., v. Nusli Neville
Wadia & Anr., AIR 2008 SC 876, while considering a
case under the Public Premises (Eviction of
Unauthorised Occupants) Act, 1971, held that
though the statute may not provide for cross-
examination, the same being a part of Principles of
Natural Justice should be held to be an indefeasible
right. It was held as follows:-
If some facts are to be proved by the landlord,
indisputably the occupant should get an opportunity
to cross-examine. The witness who intends to prove
the said fact has the right to cross-examine the
witness. This may not be provided by under the
statute, but it being a part of the principle of natural
justice should be held to be indefeasible right"
x). The Honble Supreme Court in Needle Industries
(India) Ltd. & Ors. v. N.I.N.I.H. Ltd. & Ors., AIR
1981 SC 1298, considered a case under the Indian
Companies Act, and observed that:
It is generally unsatisfactory to record a finding
involving grave consequences with respect to a
person, on the basis of affidavits and documents
alone, without asking that person to submit to cross-
examination
(xi). Honble High Court in Mehar Singh Vs. The
Appellate Board Foreign Exchange 1986 (10) DRJ 19,
while dealing with a case under the Foreign
Exchange Regulation Act, 1973, decided the appeal
in favour of the Appellants on the short ground that
the applications made to the Director of Enforcement
and before the Appellate Board during the pendency
of the appeal to summon four witnesses for cross-
examination, were not dealt with by the authorities
below.
It was held:
              17


5. Non-summoning of the said witnesses for
purposes of cross-examination has resulted in
miscarriage of justice.
55. In the nature of the seriousness of present case,
the right to cross examination would have been
given in view of gravity of the matter."
INCOME TAX APPELLATE TRIBUNAL DELHI BENCH
G: NEW DELHI
ITA No. 1415 to 1417/Del/2018 (Assessment Year:
2013-14 to 2015-16)
Shri Brij Bhushan Singal
Date of pronouncement 07/12/2018
It is not in dispute that assessee has furnished all
the details such as purchase bills, allotment details,
demat accounts, bank statements, details of
payments by cheques and sale on BSE electronic
platform, proof of payment of Securities Transaction
tax and receipt of payment through Cheque by an
independent broker, sale bills etc which is not
doubted by the revenue. The facts have already
narrated by us in earlier paras, which are undisputed
by both the parties. only following issues are to be
decided in this appeal:- i. Whether AO can use the
statements of third parties without granting
crossexamination of those parties. ii. Whether
without providing the copies of the statements as
well as the cross examination of alleged exit
providers, such evidences can be used against the
assessee for making addition. iii. Whether the
interim orders of the SEBI relied up on by the ld AO
implicate the assessee for making addition u/s 68 of
the act on alleged bogus longterm capital gains. iv.
Whether Cash Trails of The buyers of the securities
as stated by the ld AO makes the long-term capital
gain of the assessee bogus. v. Whether the
disclosure of some other persons as their undisclosed
income of Long-term capital gain affects the case of
the assessee also. vi. Whether de hors all the above
facts addition in the hands of the assessee u/s 68 of
long term capital gain can be made.
              18


Thus, it is apparent that the assessee has not been
granted an opportunity of the cross-examination of
Sri R. K. Kedia and Shri Manish Arora. The learned
authorised representative has relied upon the
decision of the Hon`ble Supreme Court where in
relying on case of state of Madhya Pradesh vs.
Chintaman sadashiv Waishampayan AIR 1961 SC
1623 wherein in para number 11, It has been held
referring another decision in Union of India vs.TR
Varma stating it broadly and without intending it to
be exhaustive, it may be observed that the rules of
natural justice require that the party should have the
opportunity of producing all relevant evidence on
which he relies, that the evidences of the appellant
should be taken in his presence, and that he should
be given the opportunity of cross-examining the
witnesses examined by that party, and that no
material should be relied on against him without he
is being given an opportunity of explaining them. It
was further stated that it is hardly necessary to
emphasize that the right to cross-examine the
witnesses who give evidences against him is a very
valuable right, and if it appears that effective
exercise of this right has been prevented by the
enquiry officer by not giving to officer relevant
documents, to which he is entitled, that inevitably
would be that the enquiry had not been held in
accordance with the rules of natural justice. The
Hon`ble Supreme Court thereafter, referring to the
another decision of the Hon`ble Supreme Court held
that the importance of giving an opportunity to the
public officer to defend himself by crossexamining
witness produced against him is necessary for
following the rules of natural justice. Further, the
decision of the Hon`ble Supreme Court in case of
Anadaman Timber industries vs. Commissioner of
Central Excise (2015) 281 CTR 241 (SC) has 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
              19


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 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 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
crossexamination 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 giving its reasons for accepting or rejecting
              20


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 notice.
In the present case, also the assessee sought
opportunity of cross-examination of the witnesses
whose statements are used by the learned assessing
officer against the assessee for making the addition.
The assessee has contested the truthfulness of the
statement of the witnesses recorded by the
assessing officer. The truthfulness is also tested by
the changing stands frequently. It is also not for the
assessing officer to decide that no opportunity is
necessary because he is not aware what could be the
purpose for the cross-examination asked by the
assessee. Therefore not granting of opportunity of
the crossexamination of the brokers Sri RK Kedia,
Manish Arora, Ankur Agarwal, directors of the
companies who have purchased shares from the
assessee through electronic platform of the Bombay
stock exchange/ NSE and various other people as
were mentioned in the assessment order is fatal to
the assessment made by the assessing officer. We
are also conscious of the decision of the Hon`ble
Supreme Court in case of M. Pirai Choodi vs. ITO 334
ITR 262, wherein the Hon`ble Supreme Court while
considering the decision of the Hon`ble MP High
Court in 302 ITR 40 has held that not granting an
opportunity of crossexamination to the assessee is
merely an regularity and therefore the High Court
was not correct in cancelling the order of the
adjudicating authority. Therefore, Hon`ble Supreme
Court thought it fit to set aside the matter to the
adjudicating authority with a direction to grant
opportunity of crossexamination to the assessee.
Before us, an issue arises that whether the matter
should be set aside to the file of the learned
assessing officer to grant assessee an opportunity of
              21


crossexamination of all the witnesses whose
statements have been used by the learned assessing
officer in the assessment order for the purpose of
making the addition under section 68 of the act or to
annul the assessment order itself. On careful perusal
of the decision of the Hon`ble Supreme Court, it is
noted that such direction were given by the Hon`ble
Supreme Court in the case of writ petition filed by
the assessee before the Hon`ble High Court and
therefore Supreme Court held that the assessee
could have gone before the Commissioner Appeals to
agitate this issue of cross-examination and therefore
the opportunity was available to the assessee at that
particular point of proceedings.
In the present case, assessee has also raised the
same issue before the learned CITA that cross-
examination has not been provided to the assessee
despite asking for the same. The learned CITA has
also brushed aside the above argument of the
assessee without giving any plausible reason.
Therefore, when the assessee has not exhausted all
the judicial process before reaching to the higher
forum, but has bypassed them by invoking the
different rights, then in such circumstances, the
violation of the principles of natural justice, such as
not granting of opportunity of the crossexamination,
becomes any regularity and not an illegality.
However, when the assessee has exhausted all the
remedies available to him by exercising his right of
the judicial process, then in such circumstances
violation of the principle of natural justice, such as
not granting an opportunity of cross-examination of
the witness becomes an illegality. Therefore, in such
circumstances, the order/addition made based on
the statement of third parties and no opportunity has
been     granted    to    the   assessee     for   their
crossexamination despite repeated requests, addition
deserves to be deleted. In view of our above
findings, findings of the coordinate bench in
assessee`s own case for earlier years, and based on
the various judicial precedent relied upon, we do not
agree that document seized from third-party can be
used for making addition in the hands of the
              22


assessee without assessee being granted an
opportunity of cross-examination of those parties.
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI
`E' BENCH, NEW DELHI
ITA No. 2576/Del/2010 Assessment year: 2003-04
Lords Distillery Limited,
COMMON    GRIEVANCE    NO. 2 NO CROSS
EXAMIANTION OF SHRI R.K. MIGLANI WAS
ALLOWED BY THE REVENUE
The ld. DR concluded by stating that ,in effect, Shri
R.K. Miglani was an employee of the member of the
UPDA and, therefore, there was no necessity for his
cross examination. The contention of the ld. DR that
since Shri R.K. Miglani was related to the member
distilleries of UPDA, therefore it was not necessary to
allow cross examination is not acceptable. The
Hon'ble High Court of Delhi in the case of Shri S.N.
Aggarwal 293 ITR 43 has held as under: "11. In the
present case the Assessing Officer has placed
reliance on the statement of Smt.Sarla Aggarwal,
daughter of the assessed while arriving at the
conclusion, that the entries belong to the
transactions of the assessed. This statement made
by Smt.Sarla Gupta, cannot be said to be relevant or
admissible evidence against the assessed, since the
assessed was not given any opportunity to
crossexamine her and even from the statement, no
conclusion can be drawn that the entries made on
the relevant page belongs to the assessed and
represents his undisclosed income. It is also an
admitted fact that the statement of the assessed was
not recorded at any stage during the assessment
proceedings. The only conclusion which can be drawn
about the nature and contents of the document is
that it is a dumb document and on the basis of the
entry of nothings or figure etc. in this document, it
cannot be concluded that this represents the
undisclosed income of the assessee."
65. The Hon'ble Supreme Court in the case of
Andaman Timber Vs. CIT in Civil Appeal No. 4228 OF
2006 has held as under:
              23







"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 in as much as it
amounted to violation of principles of natural justice
because of which the assessee was adversely
affected."
66. The ld. DR has strongly emphasized on the
evidentiary value of the statement recorded u/s
132(4) of the Act and has relied upon several judicial
decisions to support his contentions. The ld. DR
further relied upon the provisions of section 132(4A)
of the Act and 292C of the Act. These sections read
as under:
70. It can be seen from the above chart that the
case in which the presumption was available, the
Revenue accepted what was returned by Shri R.K.
Miglani and on the strength of his statement that the
documents seized from his premises belong to
distilleries, the additions have been made as
unexplained expenditure/contribution to UPDA.
71. It is well settled that only the person competent
to give evidence on the truthfulness of the contents
of the document is writer thereof. So, unless and
until the contents of the documents are proved
against a person, the possession of the document or
hand writing of that person on such document by
itself cannot prove the contents of the document.
72. Considering the facts of the dispute in totality,
we are of the opinion that the assessment framed
u/s 153C of the Act is in gross violation of the
principles of natural justice and deserve to be tagged
as nullity.
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI
BENCHES: `F', NEW DELHI
ITA No. 5662/Del/2018 AY: 2014-15
Veena Gupta Date of Pronouncement: 27/11/2018
              24


12.1 It is pertinent to note that assessee, vide letter
dated 21/12/16 had asked Ld. AO to provide
material based upon which various allegations have
been levied by Ld. AO. These factors from para 20 of
assessment      order,   wherein    assessee    raised
objections, one of which is opportunity to cross
examine, in case of any evidence used against
assessee.
12.3 To our surprise, Ld. AO without providing any
material evidence, report on which he was relying
and not granting an opportunity to cross examine
the persons on whose statement he arrived at
certain presuppositions, made addition in the hands
of assessee. This is evident from para 22 of
assessment order.
13. Before Ld. CIT (A) assessee once again raised
plea of crossexamination granted to assessee and
materials not based upon which the submissions
have been made has not been provided for
examination. Even then opportunity was not granted
to assessee, though Ld. CIT (A) had coterminous
powers as that of Ld. AO.
14. In our view this amounts to gross violation of
principles of natural Justice. We draw our support
from the decision of Hon'ble Supreme Court in the
case of Andaman Timber Industries versus CCE
reported in (2015) 62 Taxmann.com 3, wherein
Hon'ble court observed as under:
"According to us, not allowing the assessee to
crossexamine 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
             25


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 was granted and the aforesaid
plea is not even dealt with by the Adjudicating
Authority."
15. We, accordingly, respectfully following decision
of Hon'ble Supreme Court in the case of Andaman
Timber Industries versus CCE (supra) allow appeal
ofassessee on legal ground raised in Ground 2(c),
and quash and set-aside the assessment order so
passed.
15.1 As we have allowed assessee's appeal on
Ground 2(c), other grounds raised by assessee
becomes academic in nature which do not require
any adjudication at this stage. Recent coordinate and
division Pune bench ITAT decision in case of
Brijendra Nath Agarwal (ITA 1666/Pun/2015) date of
order: 29/11/2018 has held as under:
"The issue which arises in the present appeal in such
scenario, is whether re-assessment proceedings
which have been completed against assessee, can
stand in the eyes of law, where (a) documents asked
for have not been supplied to the assessee and (b)
cross-examination of witnesses have not been
provided to the assessee. Before proceeding further,
it may be pointed out that the Assessing Officer
refers to the proceedings before DDIT(Inv) and
alleges that all the documents have been handed
over by DDIT(Inv) to the assessee and hence, they
were not being provided. It is not clear as to what
documents were provided by DDIT(Inv). Even if it
was so, then it was incumbent upon the Assessing
Officer to provide the documents, which were in his
possession and which he was seeking to rely on in
order to complete assessment against assessee. The
assessee has time and again asked for the copies of
documents and even was ready to pay copying
charges but the Assessing Officer had blatantly
refused to give the documents on the premise that
they have already been received by assessee. But no
              26


such evidences of such documents being handed
over by DDIT(Inv) has been filed on record. Another
aspect to be noted is that the Assessing Officer is
relying on statements of two persons, the assessee
had sought cross-examination of the said persons
and of many evidences also, which have not been
provided by Assessing Officer. Another aspect of the
issue is that the Assessing Officer has purely relied
on the statement of Shri Pravin Kumar Jain of having
provided accommodation entries in order to first
initiate re-assessment proceedings and then also to
complete re-assessment proceedings but the copy of
said statement made by Shri Pravin Kumar Jain has
been refused by him. After the search proceedings,
the assessee has even filed copy of affidavit of Shri
Pravin Kumar Jain in this regard, but the same has
not been commented on by the Assessing Officer nor
referred to before making addition in the hands of
assessee. The issue which has been raised before us
is whether in such circumstances, re-assessment
order passed by the Assessing Officer without
providing copies of documents and without affording
cross-examination is invalid and bad in law.
22. The issue which needs to be addressed is non
providing of copies of documents and non affording
of cross-examination of the witnesses is whether
fatal to the assessment proceedings. The Assessing
Officer alleges that the documents were provided by
DDIT(Inv). However, it is not clear as to copies of
what documents have been given by DDIT(Inv). In
any case, the investigation was carried out not in the
hands of assessee but in the hands of other person,
so once the assessee asks that the documents be
issued to it on which reliance is placed upon for
reopening the assessment, then it was incumbent
upon the Assessing Officer to provide the same to
the assessee in order to enable the assessee to
peruse the same and then point out whether by
relying on the said documents, the re-assessment
has been validly reopened. May be, the letter which
is forwarded by DDIT(Inv) to the Assessing Officer is
an internal document and the Assessing Officer has
provided gist of the same to the assessee. However,
              27


there are other documents the assessee has asked
for i.e. copies of page No.6 to 15 of bundle No.1
seized from the office of CIIL, Bhosari, the details of
Directors of the companies as mentioned in the said
letter. In addition, the assessee had sought cross-
examination of different persons whose statements /
materials seized from them were being relied upon.
However, we have already made reference to the
said documents in paras 15, 17 and 18 hereinabove.
The assessee has time and again asked for the
copies of said documents but the same have not
been supplied to the assessee. The assessee has also
sought cross-examination of the persons whose
statements were being relied upon to propose re-
assessment in the hands of assessee, for which
reasons were recorded for reopening the assessment
but none of the cross-examinations have been
allowed. The nonallowance of cross-examination has
been held by the Hon'ble Supreme Court in M/s.
Andaman Timber Industries Vs. Commissioner of
Central Excise in Civil Appeal No.4228 of 2006,
judgment dated 02.09.2015 to be most fatal. The
facts of present case are similar, wherein no
crossexamination has been allowed though the
assessee has time and again asked for the same.
Even if we accept the reasoning of Assessing Officer
that seized documents have been supplied to the
assessee but no cross-examination of witnesses has
been provided to the assessee. In such scenario,
invoking of jurisdiction under section 147/148 of the
Act gets affected as the assessee has a right to file
objections to reopening of assessment and such a
right of assessee has been violated. The learned
Authorized Representative for the assessee has
pointed out that in the absence of getting the
documents relied upon and in not allowing cross-
examination of witnesses, the assessee was not in a
position to file objections against reopening of
assessment. The jurisdiction is conferred upon the
Assessing Officer for making re-assessment in the
case of assessee only on the basis of aforesaid
seized documents and the communication from
DDIT(Inv), who in turn, has relied on the statements
of various persons who were searched. Hence, in
              28


such circumstances, it was incumbent upon the
Assessing Officer not only to allow cross-examination
of witnesses but also furnish the copies of all the
seized documents relied upon and even the letter
forwarded by DDIT(Inv). It is this letter which has
been relied upon by Assessing Officer to carry out
investigation against assessee. Hence, the same
partakes the character of an evidence to be used
against assessee and the principles of natural justice
demand that such evidence which is to be used
against assessee, then copy of the same should be
made available to the assessee. The contents of said
letter have been made available by the Assessing
Officer, hence we do not understand what stopped
him for making available the letter, copy of which
was forwarded by DDIT(Inv). The perusal of
assessment order reflects that the Assessing Officer
has elaborately referred to the contents of said letter
and relied upon the investigation carried out by
DDIT(Inv) in order to reopen the assessment in the
case of assessee. In the totality of the above said
facts and circumstances, where the assessee has
been denied copy of statement recorded and copy of
letter issued by DDIT(Inv), which has been
extensively relied upon by the Assessing Officer to
record reasons for reopening the assessment and
failure of Assessing Officer in not providing cross-
examination of witnesses in order to enable the
assessee to meet the case of both reopening and
also the assessment being carried out against the
assessee on the basis of such statements, violates
the basic fundamental principle of natural justice and
in such scenario, the assessment which has been
completed against the assessee cannot stand.
Accordingly, we hold so.
24. The Hon'ble Supreme Court in GKN Driveshafts
India Ltd. Vs. ITO (supra) has held that it is
incumbent upon the Assessing Officer to provide an
opportunity to the assessee to submit his objections
to reopening of assessment and where the Assessing
Officer has failed to provide such an opportunity, re-
assessment order cannot stand. In the facts of
              29


present case, since the assessee did not receive
copies of documents relied upon and also no cross-
examination of witnesses on whose statements the
Assessing Officer relied upon to record reasons for
reopening assessment, was provided to the
assessee, hence the assessee was prevented from
filing the objections to reopening of assessment. In
such scenario, even if the assessee was well aware
of reasons for reopening but the failure to provide
opportunity to file objections to the reopening of
assessment violates the governing principle of law
and hence, reassessment order needs to be quashed
and set aside.
25. The Hon'ble Bombay High Court in Agarwal
Metals and Alloys Vs. ACIT (2012) 346 ITR 64 (Bom)
has propounded such a view in turn relying on the
judgment of the Hon'ble Supreme Court in GKN
Driveshafts (India) Ltd. Vs. ITO (supra). The learned
Authorized Representative for the assessee has
raised various issues of change of opinion in the case
of Shri B.N. Agarwal, wherein original assessment
was completed under section 143(3) of the Act.
However, since we have decided the issue on the
other aspects of case and held the assessment order
invalid and bad in law, we are not addressing the
same. It may be pointed out herein itself that since
the Assessing Officer did not provide copies of
statements and did not allow crossexamination, then
the plea of assessee that it could not object to the
reasons recorded for reopening the assessment has
merits to be allowed and for such act, wherein no
proper opportunity was given to the assessee to file
objections to reassessment, proceedings initiated
under section 147/148 of the Act cannot stand.
There is no merit in the observations of CIT(A) that
the assessee had participated in assessment
proceedings and hence, it cannot be said that he had
any objections to reopening of assessment. The
preliminary issue affecting the jurisdiction of
Revenue authorities can be raised at any stage and
accordingly, we admit the plea of assessee and hold
that assessment order passed in the case without
jurisdiction is both invalid and bad in law. The
             30


grounds of appeal No.1 to 3 raised by assessee are
thus, allowed."
We humbly request that instant proceedings may
please be quashed on this count only that Ld AO has
chosen not to supply any back material referred in
reasons recorded namely investigation wing report
letter etc and even cross examination is never
offered with reference to statement of searched
person if any , so entire proceedings are bad in law.
Recently Delhi ITAT A bench decision in case of
Ashtech Industries Private Limited (20/12/2018) has
clearly held that "We further note that AO supplied
the reasons recorded
(without approval) to assessee (as placed in paper
book before us) which were objected before the AO
in detailed manner vide objection letter dated
27.04.2016 in which note worthy aspect is assessee
specifically sought from AO copies of back material
referred in reasons including investigation wing
report/letter, seized documents etc referred therein,
AO without confronting any back material as evident
from objection disposal order dated 17.05.2016
rejected assessee's objection challenging reopening
action. In various letters placed in paper book and
referred in written submission before us, it was
specifically asked to AO during assessment
proceedings to confront the back material as referred
in reasons recorded namely in letters dated
07/06/2016, 20/10/2016 which request of assessee
has not been adverted to by the AO is patent from
objection disposal order dated 17/05/2016 and
further notices dated 09/08/2016 u/s 142(1) and
show cause notice dated 13/10/2016. In none of
these notices as placed in paper book, we could find
the back material being confronted to assessee as
specifically requested by assessee. We note here
that the Tribunal in various decisions specially one
which is referred by Ld counsel for the assessee
extensively in case of Moti Adhesives (ITA
3133/Del/2018) in order dated 25/06/2018 copy
placed before us, has been consistently holding while
taking support from Hon'ble Apex court leading
              31


decision in Andaman Timber Industries case (Civil
Appeal No. 4228 OF 2006) reported at 127 DTR 241
that violation of principle of natural justice (here
withholding of back material referred in reasons
which is specifically requested for repeatedly) is a
serious flaw and results in nullity of the order so
passed, which is squarely applicable to present
case."
All the above decisions squarely answers the serious
wrong impression in mind of revenue authorities on
principle of cross examination may be compromised
or eschewed and excluded from income tax
assessment proceedings where entire assessment is
otherwise plagiarized and heavily influenced by
statements recorded by investigation wing which
cant be taken on board unless tested on terra ferma
of cross examination which for reasons best known
to revenue is not adhered in any of such cases. As
discussed supra there are five judge constitution
bench rulings from Hon'ble Apex court (Hon'ble
Supreme Court of India in Khem Chand Vs. Union of
India AIR 1958 SC 300; the Honble Supreme Court
in State of M.P. v. Chintaman Sadashiva
Vaishampayan, AIR 1961 SC 1623 etc) holding not
providing the said opportunity to crossexamine is
violative of the Principles of Natural Justice and has
also held that the meaning of the term reasonable
opportunity to include an opportunity to defined by
crossexamining the witnesses produced against the
accused.. Even celebrated decision of Hon'ble Apex
court in Andaman Timber case (supra) which this
tribunal is regularly following in various rulings
consistently is also complete answer to contrary
revenue argument which cant be accepted. In this
connection, there is one recent division bench
decision of this Hon'ble Tribunal where one Pradeep
Jindal statement was made as basis to draw adverse
inference and sans cross examination of that person
it is held by this Tribunal in case of Reeta Singhal in
ITA No.4819/DEL/2018 order dated 17/01/2019 held
(DELHI BENCHES `CAMP AT MEERUT)that:
"..6. On appeal, Ld. CIT(A) deleted the addition
mainly on the ground that the sum of Rs.50 lac
                                      32


                       received by the assessee was towards sale
                       consideration of shares of M/s. Shri Ganga Paper
                       Mills Pvt. Ltd. at face value on which the assessee
                       had not earned any capital gain. The shares already
                       existed in the balance sheet of the assessee in the
                       Assessment Years 2006-07 and 2009-10. Further,
                       the assessee was not allowed crossexamination of
                       the maker of the statement that the assessee
                       received accommodation entry of Rs.69 lac in the
                       guise of sale consideration of shares, and therefore,
                       the statement of the persons cannot be used against
                       the assessee for making addition u/s.68 of the Act
                       and relied upon the decision of Hon'ble Supreme
                       Court in the case of M/s. Andaman Timber Industries
                       (supra). No material has been brought on record by
                       the Department to show that the above findings of
                       the ld. CIT(A) are not correct. Even otherwise, no
                       specific error in the order of the ld. CIT(A) could be
                       pointed     out    by    the    learned    Department
                       Representative. Hence, we find no good reason to
                       interfere with the order of the ld. CIT(A) which is
                       hereby confirmed and the grounds of appeal of the
                       Revenue is dismissed."
                       9. Keeping in view of the facts and circumstances of
                       the case and respectfully following and applying
                       principles in aforesaid Hon'ble Supreme Court,
                       Hon'ble High Court and this Tribunal rulings, second
                       issue framed by me above on consequential impact
                       of lack of cross examination and violation of principle
                       of natural justice, I have no hesitation to accept the
                       plea of Ld AR that lack of cross examination and
                       violation of principle of natural justice results is total
                       nullity of the entire addition, hence, the additions in
                       dispute is hereby deleted."
4.1   I have gone through the aforesaid findings of the Tribunal in the case
of Amitabh Bansal vs. Income Tax Officer, Ward 46(4), New Delhi (2019)
102 taxmann.com 229 and I am of the view that the issue of cross
examination in dispute is squarely covered in favour of the assessee by the
findings of the Tribunal, as reproduced      above.    Therefore, respectfully
                                       33


following the aforesaid finding of the Tribunal, the addition in dispute is
deleted by accepting the appeal of the assessee.

5.   In the result, the appeal of the assessee is allowed.
            Order pronounced on 23-07-2019.
                                                               Sd/-
                                                            (H.S. SIDHU)
                                                         JUDICIAL MEMBER
Date: 23-07-2019
Copy to:-


1.   The appellant
2.   The respondent
3.   CIT(A) concerned
4.   CIT concerned
5.   D.R. ITAT `SMC' Bench, Delhi
6.   Guard File.




                                 // By order //




                     Asst. Registrar : ITAT Delhi Benches :
                                     Delhi

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