2016 (6) TMI 601 - HC - Income Tax

Unaccounted investment in purchase of lands - Rectification of mistake - application for rectification contending that the question of grant of cross-examination of Indravadan Prajapati would arise only in relation to the lands bearing block no. 445 and would not govern the other purchase of lands by the assessee - whetehr Tribunal erred in remanding the assessment on all counts ? - Held that - We agree with the submission of Shri Vora for the assessee that in the original judgment, the Tribunal had referred to the contention of the assessee of being denied opportunity to cross-examine the witness. Under the circumstances, the issue pertaining to assessee s appeal, that is, addition is concerned, the land bearing block no.445 should have been restored to the file of the Assessing Officer. But without any discussion, the Tribunal also remanded the issue arising in the Revenue s appeal which is completely unrelated to the question of grant of cross-examination of the witness. In that view of the matter, the assessee was justified in seeking rectification at the hands of the Tribunal since there was a clear error apparent on record. The Tribunal was thus justified in recalling the order in so far as it disposed of Revenue s appeal also. However, having done that, the Tribunal ought to have put the Revenue to notice, heard both the sides on merits and thereafter proceeded to pass the order as found appropriate in law. The Tribunal in one go recalled its earlier order and dismissed Revenue s appeal. We are not sure whether the Revenue had even an opportunity to make submissions on such revived appeal. In the result, in so far as the impugned order of the Tribunal dismissing the Revenue s appeal is concerned, the same is set aside. The order recalling the Tribunal s first order in connection with Revenue s appeal is sustained. Revenue s appeal is revived, restored to file and placed before the Tribunal for fresh disposal in accordance with law after hearing both the sides

Summary

Issues involved:
Appeal against Tribunal's judgment on unaccounted investment in land purchase, cross-examination rights, rectification application, remand of assessment, and dismissal of Revenue's appeal.

Analysis:
1. The Revenue appealed against the Tribunal's judgment regarding unaccounted investment in land purchase for the assessment year 2006-2007. The Assessing Officer had made an addition towards unaccounted investment based on a seller's statement. The CIT (Appeals) retained part of the addition but accepted the assessee's contention for the remaining lands due to lack of evidence.

2. The Tribunal's common judgment on both appeals highlighted the need for the assessee to cross-examine the seller whose statement led to the addition. The Tribunal remanded the issue to the Assessing Officer for cross-examination and directed the furnishing of the seller's statement to the assessee. The Tribunal emphasized the importance of providing an opportunity for cross-examination to ensure justice, citing a Supreme Court decision.

3. The assessee filed a rectification application, arguing that the need for cross-examination only related to specific lands purchased from the seller in question, not all transactions. The Tribunal accepted the rectification application, acknowledging the error in remanding the assessment on all counts. The Tribunal differentiated between the lands purchased from different parties and rectified the order accordingly, dismissing the Revenue's appeal.

4. The High Court noted discrepancies in the Tribunal's approach, where the issue of cross-examination should have only affected specific lands but was erroneously applied to all transactions. The Court agreed with the assessee's contention that the remand of the Revenue's appeal was unrelated to the cross-examination issue. The Court set aside the Tribunal's order dismissing the Revenue's appeal, directing a fresh disposal after hearing both sides, emphasizing the importance of due process and fair opportunity for submissions.

In conclusion, the High Court's judgment clarified the necessity of specific and fair assessments, ensuring that cross-examination rights are appropriately applied and rectifications are made with precision to uphold justice and procedural fairness in tax matters.