2014 (1) TMI 1855 - AT - Income Tax

Addition u/s 68 - grievance of the assessee is that it was not given an opportunity to cross examine the witness of the department and/or M/s. Avinashi Selling Agency (P) Ltd on whose testimony the department issued notice u/s 148 - Held that - In the assessment order neither we find any mention about the said explanation and the said evidence given by the assessee, nor it has been discussed by the AO; neither did he furnish any incriminating evidence provided by the Investigation Wing of the department to the assessee; nor did he confront the assessee with any such material nor an opportunity was given to the assessee to cross-examine the witnesses who have deposed against the assessee despite having made the specific request for it both before the Assessing Officer & CIT(A). In Krishanchand Chellaram (1980 (9) TMI 3 - SUPREME COURT) wherein laid down that the income tax authorities are bound to accede to the request of cross-examination and should provide the incriminating evidence to the assessee to controvert the same. AO has not acceded to the plea of assessee in this behalf, therefore we set aside the order and direct the Assessing Officer to re-adjudicate the matter after providing the incriminating material used against the assessee for re-opening the assessment for the relevant year under consideration and any other evidences against it and if it is the testimony of any person of M/s. Avinash Selling Agency Pvt Ltd against it, then an opportunity to cross-examine those witnesses also must be provided to it. We set aside the order passed by AO and remand back the matter to the file of Assessing Officer to re-adjudicate the same as stated above - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
Challenge to order of CIT(A) | Addition under section 68 of the Income Tax Act, 1961 | Opportunity for rebuttal and cross-examination | Failure to provide incriminating evidence | Violation of natural justice | Request for remand and cross-examination

Analysis:
- The appeal was filed against the order of the CIT(A) for the Assessment Year 2001-02.
- The grounds of appeal included challenges to the order of the CIT(A) confirming the addition made under section 68 of the Income Tax Act, 1961.
- The assessee claimed they were not given an opportunity to rebut the evidences or cross-examine witnesses relied upon by the Assessing Officer.
- The assessee argued that the addition of Rs. 5,00,000 was unjustified as it was a refund of share application money and not an accommodation entry.
- The assessee requested the opportunity to add, modify, amend, or delete grounds of appeal during the hearing.
- The case was reopened based on information that the assessee received Rs. 5,00,000 from a company engaged in providing accommodation entries.
- The assessee contended that the cheque received was a refund of share application money from a different entity, not an accommodation entry.
- The assessee's plea for cross-examination of witnesses was disregarded, leading to a violation of natural justice.
- The Assessing Officer did not consider the explanation provided by the assessee or provide incriminating evidence used against them.
- The Tribunal set aside the order and directed the Assessing Officer to re-adjudicate the matter, providing the incriminating material and allowing cross-examination of witnesses.
- The Tribunal emphasized the importance of following principles of natural justice before passing the assessment order.
- The appeal of the assessee was allowed for statistical purposes, and the matter was remanded back to the Assessing Officer for re-adjudication.