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TMI Blog2018 (4) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 to 2011-12 against respective orders passed under section 143(3) r.w.s. 147 of the Act. 3. This bunch of appeals relating to different assessee on similar issues were heard on different dates and are being disposed of by this consolidated order for the sake of convenience. 4. First, we shall take up the appeals in ITA Nos.2622/PUN/2016 to 2630/PUN/2016. However, in order to adjudicate the issues, reference is being made to the facts in ITA No.2622/PUN/2016, relating to assessment year 2009- 10. ITA Nos.2622 to 2624/PUN/2016 - Anita Sanjay Agrawal ITA Nos.2625 to 2627/PUN/2016 - Shrawan Keshavlal Agrawal HUF ITA Nos.2628 to 2630/PUN/2016 - Sanjay Shrawan Agrawal HUF 5. The assessee in ITA No.2622/PUN/2016, relating to assessment year 2009-10 has raised the following grounds of appeal:- 1. On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax, (Appeals)-1, Nashik, is not justified in confirming validity of notice issued u/s 148 particularly when AO has issued the said notice on the basis of information received from third party and without application of mind. 2. On the basis of facts and in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods as indicated in those purported bills were supplied or delivered by them. The assessee was sole proprietor of M/s. A-One Tool, was one of the alleged beneficiaries in the said hawala transactions. The total amount mentioned in the bill was Rs. 9,33,075/-. On the basis of such information, the Assessing Officer issued notice under section 133(6) of the Act with the approval of CIT-1, Nashik to the assessee dated 06.06.2013 requesting the assessee to submit his explanation on the genuineness of said transactions. In response thereto, the assessee neither attended nor furnished any explanation. Further, another opportunity was given to the assessee and the assessee in the written submissions stated that purchases were duly recorded in the books of account and the payments were made through banking channels. The assessee also explained that material purchased was utilized in production of Tester. The Assessing Officer notes that the assessee failed to produce original bills or copies of purchases made from alleged parties for verification, transport and octroi receipts. The Assessing Officer thereafter, issued notice under section 148 of the Act and asked the assessee to file the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts, transportation details, etc. were produced during the course of assessment proceedings and since the parties had admitted in front of the Sales Tax Department that they had not made any sales or purchase transactions. The said purchases were held to be bogus. Accordingly, addition of Rs. 9,33,075/- was made in the hands of assessee. 8. The first issue decided by the CIT(A) was against re-assessment proceedings initiated and in view of the ratio laid down by the Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC), the re-assessment proceedings were held to be valid. 9. The next issue which was raised by the assessee before the CIT(A) was that since the Assessing Officer has failed to allow cross-examination of the witness of the Revenue i.e. the party from whom the purchases were made, then the assessment order passed is to be quashed. The assessee also raised the issue on merits of the disallowance of purchases made in the hands of assessee. The CIT(A) has deliberated on the issue whether the purchases made by the assessee were bogus or were made from bogus parties. Reference was made to various case laws and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce issued under section 148 of the Act. However, no cross-examination was allowed to the assessee, before making the aforesaid addition in the hands of assessee. In this regard, he placed reliance on the ratio laid down by Pune Bench of Tribunal in Shri Bechan Surajbali Kumbhar Vs. ITO in ITA No.2357/PUN/2016, relating to assessment year 2011-12, order dated 07.03.2018. He further placed reliance on the decision of the Hon'ble Supreme Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise in Civil Appeal No.4228 of 2006, judgment dated 02.09.2015. He also placed reliance on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. M/s. Ashish International in Income Tax Appeal No.4299/2009, judgment dated 22.02.2011, wherein the issue raised was against cross-examination not allowed by the authorities below. He further placed reliance on the decision of Pune Bench of Tribunal in Jaydeep M. Kher Vs. DCIT in ITA No.973/PN/2013, relating to assessment year 2003-04, order dated 28.12.2016. He further placed reliance on the ratio laid down by the Hon'ble Supreme Court in Sahara India (Firm) Vs. CIT & Anr. (2008) 300 ITR 403 (SC). The learned Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Department. Information was then shared with the Income Tax Department vis-à-vis beneficiaries of said sale bills. The assessment proceedings were reopened under section 147 / 148 of the Act by the concerned Assessing Officer on receipt of such information. The case of assessee is one of such beneficiaries, wherein the allegation of Revenue is that it had received the goods from alleged hawala parties. The case of assessee on the other hand, is that it had received the goods against which payment was made through cheque and the corresponding sales were also matching and there was no merit in treating the purchases as bogus in the hands of assessee. The assessment in the case of assessee was reopened on the basis of statement recorded during the course of investigation by the Sales Tax Department. 15. The assessee in the present case before us after filing the return of income in response to notice issued under section 148 of the Act, sought reasons recorded for reopening the assessment and also asked the Assessing Officer to allow cross-examination of the persons whose statements were recorded vis-à-vis alleged bogus purchases. The said letter dated 14.10.2014 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me till date. Thereafter, the case was fixed for hearing in January, 2015 and the assessment was completed by treating the purchases made by the assessee from the alleged hawala dealers as bogus in the hands of assessee. 17. We have already referred to the letter dated 23.12.2014 of the Assessing Officer to the assessee, wherein while deciding objection No.6, reference was made to information collected from the Sales Tax Department and copies of affidavits produced by the suppliers before the Sales Tax Department and the assessee was advised to collect the same from the office of Assessing Officer at the earliest. However, no such statement has been provided to the assessee. The perusal of assessment order reflects that the said statements and affidavits filed by the hawala dealers before the Sales Tax Authorities were provided to the assessee, when the case was fixed for hearing on 16.03.2015 and on 18.03.2015, assessment order was passed. The affidavits / statements were given as late as on 16.03.2015 and the assessment order was passed on 18.03.2015 without allowing cross-examination to the assessee. 18. The issue which arises in the present appeal is whether where the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences for the party affected. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial. 16. We may, however, hasten to add that no general rule of universal application can be laid down as to the applicability of the principle of audi alteram partem, in addition to the language of the provision. Undoubtedly, there can be exceptions to the said doctrine. Therefore, we refrain from giving an exhaustive catalogue of the cases where the said principle should be applied. The question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power ; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of all these matters that the question of application of the said princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parties an opportunity of being heard before an order is passed under the provisions of section 269UD of the Act, for purchase by the Central Government of an immovable property agreed to be sold on an agreement to sell, an opportunity of being heard before such an order could be passed should be given or not. Relying on the decisions of this court in Union of India v. Col. J. N. Sinha and Olga Tellis1 it was held that : "Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made under section 269UD, not to read the requirement of such an opportunity would be to give too literal and strict an interpretation to the provisions of Chapter XX-C and in the words of Judge Learned Hand of the United States of America ' to make a fortress out of the dictionary.' Again, there is no express pro vision in Chapter XX-C barring the giving of a show-cause notice or reasonable opportunity to show cause nor is there anything in the language of Chapter XX-C which could lead to such an implication. The observance of principles of natural justice is the pragmatic requirement of fair play ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the principles of natural justice must be held to be implicit. The court has further observed that if the assessee was put to notice, he could show that the nature of accounts is not such which would require appointment of special auditors. He could further show that what the Assessing Officer considers to be complex is, in fact, not so. It was also open to him to show that the same would not be in the interests of the Revenue. 21. In the light of the aforenoted legal position, we are in respectful agreement with the decision of this court in Rajesh Kumar1 that an order under section 142(2A) does entail civil consequences. At this juncture, it would be relevant to take note of the insertion of the proviso to section 142(2D) with effect from June 1, 2007. The proviso provides that the expenses of the auditor appointed in terms of the said provision shall, henceforth, be paid by the Central Government. In view of the said amendment, it can be argued that the main plank of the judgment in Rajesh Kumar1 to the effect that direction under section 142(2A) entails civil consequences because the assessee has to pay substantial fee to the special auditor is knocked off. True it is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative function. Moreover, with the growth of the administrative law, the old distinction between a judicial act and an administrative act has withered away. Therefore, it hardly needs reiteration that even a purely administrative order which entails civil consequences, must be consistent with the rules of natural justice. (Also see : Mrs. Maneka Gandhi v. Union of India and S. L. Kapoor v. Jagmohan. As already noted above, the expression " civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. Anything which affects a citizen in his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under section 142(2A) does entail civil consequences, the rule audi alteram partem is required to be observed." 19. The Hon'ble Supreme Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise (supra) had held that According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced upon them to the extent it was adverse to the assessee. It was further observed that the right to cross-examine was a part of the audi alteram partem principle and the same could be denied only on strong reasons to be recorded and communicated. Further, vide para 12, the Hon'ble High Court notes that the assessee had filed affidavit of representative which indicated that they had received the payments from the person for rendering of services to the assessee. These affidavits were also not taken into account. The Hon'ble High Court in view thereof i.e. no opportunity to cross-examine the witnesses and the evidence led by the assessee having not been considered, held that it was clearly a breach of principles of natural justice. The matter was set aside to the file of Assessing Officer for fresh disposal after following the principles of natural justice. The learned Departmental Representative for the Revenue has strongly stated that in view of the ratio laid down by the jurisdictional High Court, there is no merit in the pleadings of learned Authorized Representative for the assessee. He also placed reliance on the decision of the Hon'ble High Court of Delhi in CIT Vs. PC Chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and issues arising before us are squarely covered by the facts and issues before the Hon'ble Supreme Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise (supra) and applying the said principle / ratio to the facts of the present case, we hold that where the assessee had sought cross-examination of the witnesses at the earliest stage i.e. while objecting to the reasons recorded for reopening the assessment, which duly has been acknowledged by the Assessing Officer in his order disposing of objections raised by the assessee against reopening of assessment. But the Assessing Officer though asked the assessee to collect the statement but failed to allow cross-examination though he admitted that the same would be allowed in due course of time. On a later date, the Assessing Officer concludes that the letters sent under section 133(6) of the Act to the dealer were returned back. But the same cannot be reason for denying cross- examination. In the absence of allowing cross-examination of witnesses used against the assessee, where the addition was made in the hands of assessee on the basis of aforesaid statements recorded by the Sales Tax Department, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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