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TMI Blog2017 (6) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions have been made by the AO in gross violation of the principles of natural justice. Recently in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] held that not granting of opportunity to cross examine witness whose statement were relied upon in making assessment is a serious flaw which makes the order nullity inasmuch as it amounts violation of principles of natural justice. Because of which assessee was adversely affected. Thus we hold that addition made in respect of Prashanth and K.B.Ramakrishna should be deleted. As regards addition of ₹ 5 lakhs standing in the name of B.Krishappa, AO made addition simply because he has not responded to the inquiry instituted against him. The AO had chosen not to seek further seek further from the assessee to enforce attendance of creditors is enforced. See CIT. CENTRAL – III Versus CHANDELA TRADING CO. (P) LTD.[2014 (11) TMI 409 - CALCUTTA HIGH COURT ] - Decided in favour of assessee. - ITA No.772/Bang/2015 - - - Dated:- 24-5-2017 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER, AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Shri C.Ramesh, CA. For The Respondent : Shri G.Kalamadha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, assessment was completed by the ITO, Ward 1(3), Mysuru under the provisions of section 143(3) of the Income-tax Act,1961 [ the Act for short] vide order dated 28th March 2013 at total income of ₹ 19,53,540/-. The disparity between returned income and assessed income is on account of disallowance of a sum of ₹ 19 lakhs falling under the head timber advance received, in the balance sheet of the assessee as on 31/3/2010. The Assessing Officer (AO) was of the opinion that advance of ₹ 11 lakhs received from one Shri R.P.Prashanth, ₹ 3 lakhs from Shri K.B. Ramakrishna and ₹ 5 lakhs from Shri B.Krishnappa was received by way of cash as advance for purchase of timber from the appellant is not genuine. The AO caused inquiry from the respective parties. In the case of Shri R.P.Prashanth it was shown that the appellant received cash on the following dates: Date Mode Amount Rs. 18/05/2009 Cash 3,00,000 24/07/2009 Cash 3,00,000 30/07/2009 Cash 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal is whether addition made by the AO under section 68 in respect of sundry creditors representing the amount advanced by them as trade advance can be made in view of the fact that respective parties had chosen not to respond to summons issued by the AO, where the assessee responded and the parties have denied advancing money. Without delving into merits of issue, we can dispose of the appeal at the very threshold. From a perusal of the assessment order, it is clear that the AO had not confronted the assessee with the material gathered by him by exercise power of commission u/s 131. The AO, no doubt, gathered information by issuing summons to the AO of the party in case of Shri Prashanth. Shri Prashanth, though admitted having purchased timber from the assessee, had denied having lent any advance in the financial year 2010-11. But the principles of natural justice demands that the assessee should be given an opportunity of rebutting this evidence which the AO has failed to do so. In case of other party i.e. K.B.Ramakrishna, he appeared in response to summons issued by the AO but denied having advanced many of ₹ 3 lakhs. But this information was also not put t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. The AO had chosen not to seek further seek further from the assessee to enforce attendance of creditors is enforced. In identical facts, in the case of CIT vs. Chandela Trading Co. P. Ltd. the Hon ble Calcutta High Court held that: 3. From the judgment in Daulat Ram Rawatmull (supra) we find the Hon'ble Supreme Court had held that a person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money is found to be not correct and from the simple fact that the explanation regarding the source of money furnished by him, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to some other person. In the context of the present case, if no further explanation could be obtained by the revenue upon the creditors failure to present themselves in enquiry, from such simple fact of omission on part of the creditors, it would be remote and far-fetched conclusion that the creditors lack identity. 4. Even from the case of Hindusthan Tea Trading Co. Ltd. (supra) relied on by the revenue we find our Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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