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TMI Blog2019 (8) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... es are quoted on Bombay Stock Exchange. The appellant company is engaged in the business of manufacturing of sponge iron, mild steel, carbon, stainless steel long products & trader of steel items, generation of power for captive consumption. Thus according to the ld. AR, assessee cannot be treated as Fly by Night Company. According to the ld. AR the appellant had issued 6,25,00,000 equity shares of Rs. 10/- each at a premium of Rs. 30/- per share during the year by way of preferential allotment. According to the ld. AR, the objective of making the issue of share capital was as under: "As part of its expansion program, the company proposes to increase its manufacturing capacity in two phases. Under 1st phase, the company proposes to instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, however, the AO has taken adverse inference against the assessee since seven companies out of 17 could not be found at the address given by the assessee. We note that the AO has acknowledged having received reply from 10 of the shareholders which the AO acknowledges at page 6 of his order. However, we note that the AO has relied upon certain statements of Shri Janardhan Chokhani & Shri Anand Sharma which were recorded on oath by the department. Likewise Shri Dinesh Kumar Dhandhania's statement recorded on oath u/s 131 of the Act dated 19.11.2014 was used to draw adverse inference against the assessee. Likewise the statement of Shri Narendra Jain recorded on oath u/s 131 on 11.04.2014 was also relied upon before drawing adverse inference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee and if the material statement is adverse in nature against the assessee then an opportunity to cross-examine the maker of the document or the third person who made the statement has to be given to the assessee as held by the Hon'ble Supreme Court in Andaman Timber Industries (supra). We note that the AO has not made any endeavour to give a copy of the statements purportedly recorded during search u/s. 132(4) of the Act or recorded u/s 131 of the Act which the AO claims to contain adverse statements against the assessee, which action is in gross violation of natural justice for the simple reason that the AO cannot use a material which is adverse against the assessee without confronting him with that to say in other words the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Incometax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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