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TMI Blog2018 (9) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of principles of natural justice - Addition on account of commission income from MCX dabba trading - Not allowing the assessee to cross examine the witness - Held that:- Not allowing the assessee to cross examine the witness by the adjudicating authority, though statements of those witnesses were made the basis of the impugned order, amounted to a serious lapse which makes the order a nullity as it amounted to violation of principles of natural justice. Also in the case of Kishanichand Chellaram v. CIT [1980 (9) TMI 3 - SUPREME COURT] it was held that any material collected at the back of the assessee and the assessee not being confronted with the same and no opportunity having been given the assessee to cross-examine, such material cannot be relied upon against the assessee. Addition to be deleted - Decided in favour of assessee Addition on account of unexplained receipts in respect of commission received from Sh. Sushil Kumar - Held that:- Income from commission from MCX trading has been declared and assessed separately and having so done, in our opinion there is no material to independently tax the figure of 10 lacs. There is no material brought on record to state that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessee to file the return of income. In response to the notice, the assessee, vide letter dated 8. 8. 2016, furnished the copy of return of income e-filed u/s153A on 3. 6. 2016 declaring an income of ₹ 24, 61, 850/-. The difference of ₹ 22, 41, 035/- due to additional income of ₹ 23, 16, 150/- was declared under the head "business or profession" in the return filed u/s 153A of the Act whereas no such income under the head "business or profession" was shown by the assessee in the return filed u/s 139 of the Act. 2. 2 As a result of search it was revealed that the assessee was involved in unaccounted sale and purchase of non-ferrous metals. In the order of assessment the AO has noted that the assessee was a key person who handled out of books sale/purchase of the metal for the Dua group. The statement of the assessee was also recorded on oath u/s 132(4) of the Act during the course of search, in which assessee stated that he was paid commission of Re. 1 per kg. However, since the assessee had made surrender of commission income @ 0. 50 paise per kg, the AO held that the assessee had made the surrender less by ₹ 12, 50, 356/- in the instant year. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission earned by him. In view of the factual statement, I find it prudent to uphold the order of the assessing officer in respect of the commission earned by him. The statement of other party shall not impact as the assessee has already stated his earnings in this regard. Further, there is no supporting material available and the so called expenses are also pure estimations only. As a result, the addition on account of the commission earned for metal trade is sustained. " 2. 4 Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds: "1 That the learned Commissioner of Income Tax (Appeals) XXVI, New Delhi has erred both in law and on facts in sustaining an addition of Rs. 12, 50, 000/- representing alleged income from commission on trading of metal for the instant assessment year. 1. 1 That basis adopted by the learned Commissioner of Income Tax (Appeals) for determining the commission income at Rs. 27, 44, 392/- instead of Rs. 14, 94, 036/- is factually and legally misconceived and untenable. 1. 2 That no basis has been stated by the learned Commissioner of Income Tax (Appeals) that commission income earned by the appellant was Rs. 1 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kindly be considered with regard to validity of statement recorded u/s 132(4) of I. T. Act. : 1 Kishore Kumar v CIT (62 taxmann. com 215, 234 Taxman 771) (Copy enclosed) Where Hon'ble Supreme Court dismissed SLP against High Court's order where it was held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. B Kishore Kumar v. CIT (52 taxmann. com 449) Madras High Court confirmed (copy of enclosed) 2 Bhagirath Aggarwal v. CIT (31 taxmann. com 274, 215 Taxman 229, 351 ITR 143) (Copy Enclosed) where Hon'ble Delhi High Court held that an addition in assessee's income relying on statements recorded during search operations cannot be deleted without proving statements to be incorrect. 3 Smt. Dayawanti v. CIT [2016] 75 taxmann. com 308 (Delhi) [2017] 245 Taxman 293 (Delhi)/[2017] 390 ITR 496 (Delhi)/[2016] 290 CTR 361 (Delhi) (Copy Enclosed) where Hon'ble Delhi High Court held that where inferences drawn in respect of undeclared income of assessee were premised on materials found as well as statements recorded by assessee's son in course of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without any satisfactory explanation, it could not be treated as bonafide and, hence addition would sustain (SURVEY CASE)" 5. We have heard the rival submissions and have also perused the material on record. The undisputed fact is that the AO has estimated commission on the basis of statement of the assessee wherein it was stated that the commission received was Re. 1 per kg. It is noted that in statement recorded on 25. 4. 2014, it was stated as under: "Q. 21 Please state association with Dua group and with Sh. Naresh Kumar Dua, Sh. Pawan Kumar Dua and Sh. Rajesh Dua? Ans. I have business association with Dua group. I handle the sale & purchase of metal business of Dua group apart from my own business in the name of M/s Kewal Metals I function as a agent by securing selling/purchaser parties for the purpose of metal trading business of Dua group for which they give commission to me which is around Rs. 1 per 1 kg and which translates to 01%. . " 5. 1 Further, in the said statement in reply to question no. 24 it had been stated as under: "Q. No. 24. The question no. 19 and 20 in reply to the same in the annexure metal pieces/scrap of sale transaction is given. Please te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from commission on trading of metal is said to be received from Shri Pawan Dua who had deposed as under: "Q. No. 5 If Sh. Himanshu Kohli was having the business relations with you, if yes then produce the activities of the same. Ans. Yes. Himanshu Kohli is selling my goods on commission basis and the ratio of the said commission is 25-30 paise per kgs. " 5. 4 The Ld. CIT (Appeals), despite the above factual position, has upheld the addition on the basis that critical and material is the statement of the assessee and further that the statement of the other party shall not impact as the assessee had already stated his earnings in this regard. The case of the assessee is that this declaration of Re. 1 per kg was an initial declaration which was explained in the very said statement by percentages of profits and on basis of the said percentages, commission was determined at 0. 50 paisa per kg which is higher than the commission of 0. 30 paisa per kg as stated by the person who has paid the commission. 6. 0 Ground No 25. 5 The Ld. CIT DR has not been able to assail the above factual aspect of the matter. He has relied on various judgments as to the validity of the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below. 9. 0 We have heard the rival submissions and have also perused the material on record. On the given facts and in terms of settled law, the statement of Sh. Gagan Arora, in absence of crossexamination cannot be used against the assessee. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE reported in 62 taxmann. com 3, while deciding an issue regarding not allowing the cross examination, has held that not allowing the assessee to cross examine the witness by the adjudicating authority, though statements of those witnesses were made the basis of the impugned order, amounted to a serious lapse which makes the order a nullity as it amounted to violation of principles of natural justice. Also in the case of Kishanichand Chellaram v. CIT reported in 125 ITR 713 (SC) it was held that any material collected at the back of the assessee and the assessee not being confronted with the same and no opportunity having been given the assessee to cross-examine, such material cannot be relied upon against the assessee. We are also guided by the judicial precedents as laid down in CIT v. Sunil Agarwal 379 ITR 367 (Del) and CIT v. Best Infrastructure (In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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