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TMI Blog2014 (11) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... d order of CIT(A) Revenue is now in appeal before us and has raised the following grounds;- 1. The Ld.CIT(A)-XX, Ahmedabad has erred in facts and circumstances of the case holding that the provisions of section 40(a)(ia) are not applicable in respect of payments of Rs. 2,47,000/- and Rs. 1,57,000/- made for masonary and centering work respectively, particularly when the payment to each person exceeded Rs. 50,000/- and the decision of Hon'ble ITAT of Vishakhapatanam in the case of Merlyn Shipping has been stayed by the Hon'ble High Court of Andhra Pradesh. 2. The Ld.CIT(A) further erred in deleting the addition of unexplained credits in the form of advances from the following customers out of total addition of Rs. 26.90 lakhs :- 1. Arvindbhai D Kanjaria 2. Gordhanbhai K Parmar 3. Hansaben J Parmar 4. Havaben A Vadia 5. Johraben S Ganja 3. The Ld.CIT(A) has erred in not confirming the addition of Rs. 45000/- (Shri Manibhai Mohanlal Yadav - Shop No.87 Rs. 10,0007-, Shri Pravinbhai Shantilal Desai, Shop No. 19 - Rs. 10,000, Shri Kantilal Manilal Doshi, Shop No.52 - Rs. 10,000/-, Shri Kantilal Manila! Doshi, Shop No. 22 Rs. 5000/-, Shri Fulchandbhai Dhrisibhai Shah, Shop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special bench decision of Hon'ble ITAT, Vishakhapattanam in the case of Merlyn Shipping & Transport Vs ACIT 136 ITD 323 which has also been followed by Hon'ble jurisdictional tribunal in the case of Prakashchandra S Yadav vs ITO bearing ITA No 927 /A/2012 and Mayur Roadways vs ITO bearing ITA No 3357/A/2009. Consequently, the addition of Rs. 2,47,000/- and Rs. 1,57,000/- made by the AO by invoking provisions of Section 40(a)(ia) is deleted and the ground of appeal raised bearing No. 3 & 4 are allowed. 5. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. Before us ld. D.R. took us through the order of A.O and supported the findings. The ld. A.R. on the other hand submitted that the persons to whom the Assessee had paid the amount were employees of the Assessee and there was employer employee relationship between them. Further since the payment was below the threshold limit applicable to the individuals, the Assessee was not obliged to deduct TDS. He thus supported the order of CIT(A). 6. We have heard the rival submissions and perused the material on record. We find that A.O while disallowing the expenses had noted that the expenses were incurred in cash a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no opportunity of cross examination was given and the appellant came to know of the inquiries only upon receipt of the order. The appellant has further argued that the AO has not properly appreciated the entries given in the books of accounts with the statement of parties and has by an error misread the same. 3.2. I have carefully considered the submission made by the appellant and the facts of the case. At the outset, it is seen that the arguments taken by the ld. A.O. in the order as well as during remand proceedings are incoherent and do not afford an easy comprehension. It is not clear as to which specific section of the Act have been invoked while making the impugned additions. Under the provisions of the I.T Act additions to returned income can only be made under a specific sections and not generally. An examination of the facts of the case indicate that the issue is regarding the veracity of liability appearing in the books of the appellant on account of advances received from customers. Thus, ordinarily the liabilities will have to be examined only on the basis of provisions of Section 68 as cash credits appearing in the books of the appellant. Once Section 68 is invoked t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is not permissible. Thus, the addition made by the AO therefore cannot be sustained. 3.3, Without prejudice to the same, it is seen that it is a settled principle of law emanating from axioms of natural justice that opportunity of cross examination is a fundamental prerequisite in every legal proceedings wherever third party statements are recorded particularly at the back of the assessee. There is no denying the fact, as observed in the case of Ennen Castings Pvt Ltd vs M M Sundaresh and Others AIR 2003 Kant 293, that 'Cross-examination is the most effective of all means for extracting truth and exposing falsehood. The object is to impeach the accuracy, credibility and general value of the evidence given in chief to sift the facts already stated by the witness to detect and expose discrepancies or to elicit suppressed facts which will support the case of the cross-examination party. The exercise of his right is justly regarded as one of the most efficacious tests, which the law has devised for the discovery of truth. It is beyond any doubt the greatest legal engine ever invented for the discovery of truth. The right of cross-examination belongs to an adverse party and parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .". So far as criminal cases are concerned the right to cross examination is a constitutional right whereas in civil proceedings, it is a principle emanating from due process. In the case of Kishanchand Chelaram vs CIT 125 ITR 713 (1980) Hon'ble Apex Court while emphasizing upon the need of cross examination have also held that "...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...". Consequently the Id. AO has committed serious error by not affording opportunity cross examination to the appellant in respect of evidences collected at his back. It is noted that even during the remand proceedings the Id. AO has not commented on the arguments taken by the appellant in this regard. Thus, in the very first place the additions made by the Id. AO by not affording opportunity of cross examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing No. 1.1, 1.2. 7.1 & 7.2. are partly allowed. 8. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 9. Before us ld. D.R. took us through the order of A.O and pointed to the various findings of A.O. He submitted that A.O after considering the submission of the Assessee has rightly made the additions. He further submitted that while deleting the addition ld. CIT(A) on perusing the chart in the paper book has stated that the amounts were found tallying in majority of the cases but no such cases have been pointed by ld. CIT(A) in the order. He therefore submitted that the ld. CIT(A) has erred in deleting the addition made by A.O. He thus supported the order of A.O. On the other hand ld. A. R. reiterated the submissions made before A.O and CIT(A) and further submitted that A.O had not granted opportunity of crossexamination to the Assessee with respect to the evidences that were collected at the back of the Assessee which was against the principle of natural justice. He thus supported the order of CIT(A). 10. We have heard the rival submissions and perused the material on record. We find that A.O has made the addition after considering the statements given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t his confirmation dtd. 27.10.2010 to the AO during the assessment proceedings. The appellant has further submitted that in the subsequent year this mistake was rectified and the balance sheet showed the amount as loan from Shri Vajubhai Jani. The amount under consideration was reported to be outstanding even on date as evident from balance sheet of the appellant for F.Y. 2010- 11, copy of which has been filed wherein Shri Jani has been shown as lender of unsecured loan. 6.2 I have carefully considered the facts of the case and the submission made by the appellant. At the bottom of the controversy lies the issue of genuineness of a liability appearing in the balance sheet of the appellant. All the three ingredients of Section 68 i.e. identity of the person, his credit worthiness and genuineness of transaction stands satisfied. The amount under consideration has passed through banking channel and the creditor is well identified. Consequently, the addition made by the Id. AO cannot be sustained. Accordingly, the addition made by the Id. AO of Rs. 6,00.000/- is deleted and the ground of appeal raised bearing No.6 stands allowed. 12. Aggrieved by the order of CIT(A), Revenue is now i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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