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TMI Blog2015 (11) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1,38,41,971. The Court finds that in the present case the basis for making the addition of ₹ 1,38,41,971 was the statement of Mr. Sant Kumar Sharma. He had furnished various details which were incriminating as far as the Assessee was concerned. It was incumbent on the AO, in those circumstances, to afford the Assessee an opportunity of cross-examination of Mr. Sant Kumar Sharma. The ITAT also noted that the Assessee could not be said to have not cooperated at all in the assessment proceedings. The Court further notes that in M. Pirai Choodi’s case (2010 (11) TMI 26 - Supreme Court of India) the Assessee had not availed the statutory remedy of filing an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against the order of the AO but had approached the High Court directly by way of a writ petition. In those circumstances, the Supreme Court held that the High Court ought to have required the Assessee to avail the remedy of a statutory appeal instead of quashing the assessment proceedings on the ground of violation of natural justice. The Supreme Court, in fact, permitted the Assessee to approach the CIT (A). As almost two decades have elapsed since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income of ₹ 3,71,79,576. 5. In the assessment order, it was recorded by the Assessing Officer ( AO ) that during the course of search cash amounting to ₹ 86 lakhs was seized from the premises of Canara Bank, Arya Samaj Road, Karol Bagh from an employee of the Assessee, one Mr. Gopal Singh. It was further recorded by the AO that a statement of the Assessee was recorded during the course of search under Section 132(4) of the Act. In response to question No.11, the Assessee is stated to have made a categorical admission that the said sum of ₹ 86 lakhs belonged to him; that it was being deposited by Mr. Gopal Singh in the Canara Bank account which was not the account of the Assessee; that routinely surplus cash was given to Mr. Gopal Singh to be deposited for which he was paid 5% of the cash money; that the seized cash amount of ₹ 86 lakhs represented my undisclosed income not recorded in the Books of Accounts . 6. The Assessee retracted the above admission during the course of the assessment proceedings, but not immediately after making the said statement. He started providing information to the AO from 14th July 1997 onwards, i.e., around two weeks be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons. The AO after setting out the entire statement of Mr. Sant Kumar Sharma concluded that the Assessee was the main person who arranged the said transactions and used Sant Kumar Sharma as a front man. The money channelized through the bank belonged to the Assessee who was the ultimate beneficiary. Despite being asked to furnish the addresses of the alleged purchase parties, i.e., Ambica Agency and H.T. Avia of Delhi, the Assessee failed to furnish any information and the origin of the fund invested in the form of purchases of export garments remained unexplained. Though no payment had in fact been made to either of the above agencies and no interest was paid to Mr. Sant Kumar Sharma, it was found that the total export realisation i.e.Rs.1,36,41,971 belonged to the Assessee was further disbursed in the form of loans in the name of the Assessee, his wife and a person known to him. The said sum was accordingly added to the income of the Assessee as unexplained cash credit under Section 68 of the Act. 9. In appeal filed before the ITAT, there was a concurrent view of the two Members comprising the Bench i.e. Mr. R.K. Gupta and Mr. R.S. Syal that the additions made in the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of this Court in CIT v. Dhingra Metal Works (2010) 328 ITR 384 (Del.) which in turn relied upon the decision of the Kerala High Court in Paul Mathews Sons Vs. Commissioner of Income Tax (2003) 263 ITR 101 (Kerala). He further submitted that the Assessee had not chosen to retract his statement till ten months after the date of the search and therefore the retraction itself was not genuine. According to him, the said retraction did not dilute the evidentiary value of the categorical admission made by the Assessee in his statement under Section 132(4) of the Act. He submitted that the addition of ₹ 86 lakhs solely on the basis of the said retracted statement as, therefore, permissible. He also placed reliance on the decision of Punjab Haryana High Court in CIT v. Lekh Raj Dhunna 344 ITR 352 to urge that an unsatisfactory explanation regarding the late retraction of a statement made during the course of the search proceedings would not be accepted, and would not impinge upon the authenticity of the statement made in the first place during the search proceedings. 13. The narration of facts hereinabove shows that the Assessee did not simply retract the statement made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied. Question (B) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. 17. Turning now to Question (A), the Court finds that indeed no opportunity was given to the Assessee to cross-examine Mr. Sant Kumar Sharma, whose statement was the principal basis for making the addition of ₹ 1,38,41,971. 18. Mr. Singh has placed reliance on the decision of the Supreme Court in ITO v. M Pirai Choodi (2011) 334 ITR 262(SC) to urge that denial of an opportunity to cross-examine by itself could not vitiate the assessment proceedings particularly when the Assessee had not raised a demand to that effect before the AO. He submitted that in the present case, it was recorded by the AO himself that despite sufficient opportunities, the Assessee did not cooperate. It was also not recorded by the AO that the Assessee had asked for cross-examination of Mr. Sant Kumar Sharma and that such opportunity was being denied by the AO. 19. The Court finds that in the present case the basis for making the addition of ₹ 1,38,41,971 was the statement of Mr. Sant Kumar Sharma. He had furnished various details which were incriminating as far as the Assessee was c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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