2018 (12) TMI 399 - AT - Income Tax

Scrutiny assessment - denial of natural justice - as argued that assessee was not supplied with the copy of documents/ material relied by the AO and no opportunity of cross examination was afforded to the assessee - AO has made the addition on the basis of the Directorate of Investigation Wing, Kolkata - Held that - AO has completed the assessment by relying on the Investigation Report, but the copy of the Investigation Report was not provided to the assessee, despite request made by him in his letter dated 23.12.2016, which is against the law settled in the case Kishinchand Chellaram vs. CIT 1980 (9) TMI 3 - SUPREME COURT . CIT(A) has himself written that AO has given reasonable opportunities to the assessee and even if there was any deficiency, appellant has due opportunity during appellate proceedings and also observed that the concept of affording cross examination is flexible, which shows that opportunity of cross examination was not provided to the assessee, which is not proper and against the law settled by the Hon ble Supreme Court of India in the case of Andaman Timber Industries vs. CIT 2015 (10) TMI 442 - SUPREME COURT - decided in favour of assessee

Summary

Issues:
Appeals against common order of Ld. Commissioner of Income Tax [Appeals]-13, New Delhi dated 25.4.2018 for assessment year 2014-15.

Analysis:
The appeals were consolidated due to common issues. The assessee declared income, including long term capital gain under section 10(38) of the Income Tax Act, 1961. The assessment was completed on 30.12.2016, and the Ld. CIT(A) dismissed the appeal. The main contention during the hearing was the lack of opportunity for cross-examination and non-provision of relevant documents to the assessee. The argument was based on various legal precedents emphasizing the importance of natural justice principles, specifically the right to cross-examine witnesses and access relevant materials relied upon by the assessing officer.

The Tribunal found that the assessing officer had completed the assessment based on an Investigation Report without providing a copy to the assessee, despite a specific request. The Tribunal referred to legal precedents, including judgments like Kishinchand Chellaram vs. CIT and CIT vs. Ashwani Gupta, highlighting the necessity of providing relevant documents for cross-examination to ensure natural justice. The Tribunal also cited a case where a similar issue was addressed by the ITAT, SMC, Delhi Bench, emphasizing the importance of allowing cross-examination to maintain fairness in proceedings.

The Tribunal noted that the Ld. CIT(A) had acknowledged the deficiency in providing an opportunity for cross-examination but considered it acceptable during appellate proceedings. However, the Tribunal emphasized that the denial of cross-examination violated principles of natural justice as established by legal precedents. Relying on the previous ITAT decision in a similar case, the Tribunal concluded that the addition in dispute should be deleted, and the appeal of the assessee allowed. The decision was based on the importance of upholding natural justice principles, including the right to cross-examine witnesses and access relevant documents for a fair assessment process.

The Tribunal extended the decision to three other appeals with similar facts, emphasizing that the principles applied in the main case would be applicable mutatis mutandis to ensure consistency in the outcome. As a result, all four appeals filed by the assessee were allowed, highlighting the significance of providing a fair opportunity for cross-examination and access to relevant materials in income tax assessment proceedings.