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TMI Blog2016 (5) TMI 1585X X X X Extracts X X X X X X X X Extracts X X X X ..... addition cannot be made on the basis of the statement recorded of third party and without providing opportunity of cross examination of the witness to the assessee, in view of the Hon ble Delhi High Court decision in the case of CIT vs. Pradeep Kumar Gupta Anr. [ 2006 (11) TMI 184 - DELHI HIGH COURT] We are of the considered opinion that the addition made on the basis of the statement in the present case is not sustainable in the eyes of law, because the right of cross examination to the assessee was not provided, hence, we delete the addition made by the AO and confirmed by the Ld. CIT(A) and allow the Appeal of the Assessee. - I.T.A. No. 3107/DEL/2013 - - - Dated:- 10-5-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Assessee : Sh. Salil Aggarwal, Adv. Sh. Shailesh Gupta, CA For the Department : Sh. R.S. Negi, Sr. DR ORDER PER H.S. SIDHU : JM This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XVIII, New Delhi dated 01.3.2013 pertaining to assessment year 2005-06 on the following grounds:- 1. That the learned Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on suspicions and surmises and is liable to be deleted as such. 5. That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts by ignoring the fact that there could be no double taxation of the same sum once as sale consideration on sale of shares of M/s Capital Town Planners Ltd. to MIs Passion Chits Company Private Ltd. and again as undisclosed income received from MIs Passion Chits Company Private Ltd. This addition is in disregard of the judgment of Apex Court in the case of Laxmipat Singhania vs CIT reported in 72 ITR 291 and therefore, unsustainable. 6. That the learned Commissioner of Income Tax (Appeals) has ignored the basic fact that the learned ITO solely based his order on statement made by Sh. D.N. Taneja on 07.01.2009 wherein he surrendered Rs. 6.23 crores, wherein he specifically surrendered Rs. 15,00,000/- on behalf of appellant company, ignoring and overlooking the basic fact that Sh. D.N. Taneja was never a director in the appellant company and nor he had any shareholding in the appellant company, and thus, the surrender made by him on behalf of appellant company cannot be relied upon, as he is not aware of the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f giving accommodation entry to the assessee company amounting to Rs. 15 lac. The AO therefore, asked the assessee to :- i- Produce the Director of M/s Passion Chit Co. Pvt. Ltd. ii- Confirm whether the assessee company was a group company of Taneja Group of companies. iii- Whether the Directors / shareholders were related to Sh. DN Taneja. iv- Provided with the statement of Sh. DN Taneja. v- Provide independent third party evidence and furnish documentary evidence to prove the identity or creditworthiness and genuineness of the transaction. 2.1 The AO treated the amount of Rs. 15 lacs as assessee s income from undisclosed sources and made addition u/s. 68 of the Act as the assessee had failed to discharge its onus that the share application money was genuine and had failed to establish the identity and creditworthiness of the persons making the investment as well as its capacity to make the investment. The Director of the Company was also not produced by the assessee. The AO completed the assessment at Rs. 15 lacs u/s. 147/143(3) of the I.T. Act, 1961 vide his order dated 30.12.2011. 3. Aggrieved with the action of the Assessing Officer, Assessee filed the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever a Director nor a share holder in the assesee company and thus no reliance could have been placed on such general statement and as such, the reasons recorded by the AO were merely based on suspicion, surmises and conjectures and are hence not sustainable in the eyes of law. We find considerable cogency in the Ld. Counsel of the assessee s submissions that addition cannot be made on the basis of the statement recorded of third party and without providing opportunity of cross examination of the witness to the assessee, in view of the Hon ble Delhi High Court decision in the case of CIT vs. Pradeep Kumar Gupta Anr. reported in (2008) 303 ITR 95 (Delhi). We find that the Hon ble Delhi High Court in this case has held as under:- That the assessment had not been completed under section 143(3) of the Act. There were banking transactions between the assesses and A. The reassessment proceedings had been initiated after several years of the acceptance of the return under section 143(1) of the Act. The assessee s failure to bring the person tilling the land on their behalf could not inexorably lead to the conclusion that no agricultural income had been generated by the assesses. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits givi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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