The ITO, Ward-2(3),, Bhavnagar v. M/s. Gandhi Vadia Associates, Bhavnagar

ITA 443/AHD/2013 | 2008-2009
Pronouncement Date: 14-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 44320514 RSA 2013
Assessee PAN AAHFG8975H
Bench Ahmedabad
Appeal Number ITA 443/AHD/2013
Duration Of Justice 1 year(s) 8 month(s) 29 day(s)
Appellant The ITO, Ward-2(3),, Bhavnagar
Respondent M/s. Gandhi Vadia Associates, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 14-11-2014
Date Of Final Hearing 31-10-2014
Next Hearing Date 31-10-2014
Assessment Year 2008-2009
Appeal Filed On 15-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI A.M.) I. T. A. NO. 443 / AHD/ 20 1 3 (A SSESSMENT YEAR: 2008 - 09) INCOME - TAX OFFICER WARD - 2(3) BHAVNAGAR V/S M/S. GANDHI VADIA ASSOCIATES NR. VEGETABLE MARKET BOTAD BHAVNAGAR (APPELLANT) (RESPONDENT) PAN: AAHFG8975H APPELLANT BY : SHRI V. K. SINGH SR. D.R. RESPONDENT BY : SHRI BHARAT POPAT A.R. ( )/ ORDER DATE OF HEARING : 31 - 10 - 2014 DATE OF PRONOUNCEMENT : 14 - 11 - 2014 PER SHRI ANIL CHATURVEDI A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - XX AHMEDABAD DATED 14.12.2012 FOR A.Y. 2008 - 09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSH IP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CIVIL AND BUILDING CONSTRUCTION A CTIVITIES. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08 - 09 ON 31.03.2009 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 28.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 52 42 180/ - . ITA NO 443/AHD/2013 . A.Y. 2008 - 09 2 AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 14 TH DECEMBER 2012 GRANTED PARTIAL RELI EF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US AND H AS RAISED THE FOLLOWING GROUNDS; - 1. THE LD.CIT(A) - XX AHMEDABAD HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE HOLDING THAT THE PROVISIONS OF SECTION 4 0(A)(IA) ARE NOT APPLICABLE IN RESPECT OF PAYMENTS OF RS. 2 47 000/ - AND RS.1 57 000/ - MADE FOR MASONARY AND CENTERING WORK RESPECTIVELY PARTICULARLY WHEN THE PAYMENT TO EACH PERSON EXCEEDED RS.50 000/ - AND THE DECISION OF HON'BLE ITAT OF VISHAKHAPATANAM IN THE CASE OF MERLYN SHIPPING HAS BEEN STAYED BY THE HON'BLE HIGH COURT OF ANDHRA PRADESH. 2. THE LD.CIT(A) FURTHER ERRED IN DELETING THE ADDITION OF UNEXPLAINED CREDITS IN THE FORM OF ADVANCES FROM THE FOLLOWING CUSTOMERS OUT OF TOTAL ADDITION OF RS.26.90 L AKHS : - 1. ARVINDBHAI D KANJARIA 2. GORDHANBHAI K PARMAR 3. HANSABEN J PARMAR 4. HAVABEN A VADIA 5. JOHRABEN S GANJA 3. THE LD.CIT(A) HAS ERRED IN NOT CONFIRMING THE ADDITION OF RS. 45000/ - (SHRI MANIBHAI MOHANLAL YADAV - SHOP NO.87 RS.10 0007 - SHRI PRAVINBHAI SHANTILAL DE SAI SHOP NO. 19 - RS.10 000 SHRI KANTILAL MANILAL DOSHI SHOP NO.52 - RS. 10 000/ - SHRI KANTILAL MANILA! DOSHI SHOP NO. 22 RS. 5000/ - SHRI FULCHANDBHAI DHRISIBHAI SHAH SHOP NO. 53 - RS.10 000/ - ) NOT REFLECTED IN THE BOOKS OF ACCOUNTS WHILE DELETING T HE ADDITION OF RS.2 42 180/ - AND RS. 8 95 000/ - BY HOLDING THAT IT IS COVERED IN THE AMOUNT OF RS. 41 LAKHS DEBITED IN THE PROFIT & LOSS ACCOUNT. 4. THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF CAPITAL OF RS. 6 LAKHS BY NOT APPRECIATING THE FACT THAT N EITHER THIS AMOUNT WAS REFLECTED IN THE ACCOUNT OF PARTNER SHRI GHANIBHAI A VADIA NOR CONFIRMED BY HIM. THE LD.CIT(A) FURTHER ERRED IN HOLDING THAT THE SAID AMOUNT OF RS. 6 LAKHS WAS RECEIVED AS LOAN FROM ONE SHRI VAJUBHAI JANI PARTICULARLY WHEN NO SU CH PLEA WAS TAKEN BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOR ANY EVIDENCE WAS SUBMITTED DURING THE APPELLATE PROCEEDINGS IN THE PAPER BOOK OF THE ASSESSEE FORWARDED TO THE ASSESSING OFFICER FOR REMAND REPORT BY THE CIT(A). 1 ST GROUND IS WITH RESPECT TO DELETION OF ADDITION MADE U/S 40(A)(IA) OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION THE DETAILS OF MASONARY WORK EXPENSES OF RS. 5 36 300/ - . A.O NOTICED THAT OUT OF TOTAL EXPENSES RS. 1 29 500 / - WAS CASH PAYMENT TO SHRI AMRISHBHAI RS. 53 500/ - TO SHRI SADIKBHAI AND RS. 64 000/ - TO SHRI DHARMESHBHAI KADIA. HE NOTICED THAT THE PAYMENTS WERE IN CASH AND ASSESSEE HAD NOT DEDUCTED TDS. H E WAS OF THE VIEW THAT PROVISIONS OF SECTION 40(A)(IA) WERE APPLICABLE TO THE EX PENSES AND ACC ORDINGLY DISALLOWED THE AGGREGATE PAYMENT OF RS. 2 47 000/ - . ON PERUSING THE CENTERING WORK EXPENSES OF RS. 2 98 850/ - A.O NOTICED THAT ASSESSEE HAD MADE CASH PAYMENTS AGGREGATING TO RS. 1 57 0 00/ - BUT HAD NOT DEDUCTED TD S . H E WAS THEREFORE OF THE VIEW THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE TO THE ITA NO 443/AHD/2013 . A.Y. 2008 - 09 3 AFORESAID CASH PAYMENTS AND SINCE ASSESSEE HAD NOT DEDUCTED TDS . HE THEREFORE DISALLOWED THE EXPENSES OF RS. 1 57 000/ - . AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CA RRIED THE MATTER BEFORE CIT(A). CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER: - 5.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE FACTS OF THE CASE. THE ARGUMENT OF THE APPELLANT THAT THE AMOUNTS OF MONIES PAID DID NOT EXCEEDE D THE THRESHOLD LIMITS HAVE BEEN FOUND TO BE CORRECT. IT IS AN UNDISPUTED FACT OF THE CASE THAT THE AMOUNTS UNDER CONSIDERATION WERE NOT APPEARING AS PAYABLE ON THE LAST DATE OF THE PREVIOUS YEAR. IT IS SEEN THAT THE MATTER OF ALLOWANCE OF AMOUNTS U/S.40(A )(IA) IS NOW COVERED BY THE SPECIAL BENCH DECISION OF HON'BLE ITAT VISHAKHAPATTANAM IN THE CASE OF MERLYN SHIPPING & TRANSPORT VS ACIT 136 ITD 323 WHICH HAS ALSO BEEN FOLLOWED BY HON BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF PRAKASHCHANDRA S YADAV VS ITO BEARING ITA NO 927 /A/2012 AND MAYUR ROADWAYS VS ITO BEARING ITA NO 3357/A/2009. CONSEQUENTLY THE ADDITION OF RS.2 47 000/ - AND RS.1 57 000/ - MADE BY THE AO BY INVOKING PROVISIONS OF SECTION 40(A)(IA) IS DELETED AND THE GROUND OF APPEAL RAISED BEARING NO . 3 & 4 ARE ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US LD. D.R. TOOK US THROUGH THE ORDER OF A.O AND SUPPORTED THE FINDINGS. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE PERSONS TO WHOM THE ASSESSEE HAD P AID THE AMOUNT WERE EMPLOYEES OF THE ASSESSEE AND THERE WAS EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THEM. FURTHER SINCE THE PAYMENT WAS BELOW THE THRESHOLD LIMIT APPLICABLE TO THE INDIVIDUALS THE ASSESSEE WAS NOT OBLIGED TO DEDUCT TDS. HE THUS SUPPORTED TH E ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O WHILE DISALLOWING THE EXPENSES HAD NOTED THAT THE EXPENSES WERE INCURRED IN CASH AND ASSESSEE WAS LIABLE TO DEDUCT THE TAX BEFORE MAKING THE PAYME NT. ON THE OTHER HAND BEFORE US ON BEHALF OF ASSESSEE IT IS SUBMITTED THAT THE PERSONS TO WHOM THE PAYMENTS WERE MADE WERE THE EMPLOYEES OF ASSESSEE AND THERE WAS EMPLOYER EMPLOYEE RELATIONSHIP AND FURTHER SINCE THE PAYMENTS WAS LESS THAN PRESCRIBED LIMI T ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. WE FIND THAT TH E AFORESAID SUBMISSION OF ASSESSEE FOR NOT DEDUCTING TDS WAS NOT TAKEN BEFORE A.O. WE FURTHER FIND THAT THERE IS NO FINDING OF CIT(A) ON THE SUBMISSION OF ASSESS EE THAT THERE EXISTED EMPLOYER EMPL OYEE RELATIONSHIP AND THE PAYMENTS WERE BELOW THE PRESCRIBED LIMIT. WE THEREFORE FEEL THAT THE AFORESAID ASPECT NEEDS TO BE EXAMINED AT THE END OF A.O. WE THEREFORE REMIT THE MATTER TO THE FILE OF A.O TO EXAMINE THE ISSUE IN THE LIGHT OF SUBMISSIONS MADE B Y ITA NO 443/AHD/2013 . A.Y. 2008 - 09 4 THE ASSESSEE AND THEREAFTER TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE RESULT THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2 & 3 ARE INTERCONNECTED AN D THEREFORE CONSIDERED TOGETHER . 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF THE CASH BOOK A.O NOTICED THAT ASSESSEE HAD SHOWN TO HAVE RECEIVED CASH ON ACCOUNT OF ADVANCES FROM VARIOUS CUSTOMERS. A.O THEREAFTER I SSUED SUMMONS TO VARIOUS CUSTOMERS AND RECORDED THEIR STATEMENTS . O N THE BASIS OF THE STATEMENTS RECORDED H E NOTICED THAT THERE WERE DISCREPANCIES BETWEEN THE STATEMENT AND THE BALANCES SHOWN BY THE ASSESSEE. HE THEREFORE CONSIDERED THE AGGREGATE AMOUNT O F RS. 26 90 000/ - RECEIVED FR OM VARIOUS CUSTOMERS ( LISTED AT P ARA 10 SERIAL NO. A TO P) AS UNEXPLAINED AND ADDED IT TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PARTIAL RELIEF BY HOLDING AS UNDER: - 3.1. IT IS THE CASE OF THE APPELLANT THAT THE AMOUNTS REPRESENTS ADVANCES RECEIVED FROM PROSPECTIVE BUYERS AND THAT THE AMOUNT SHOWN IN HIS BOOKS TALLY WITH THE AMOUNTS RECORDED IN THE SUBSEQUENTLY REGISTERED SALE DEEDS. IT HAS BEEN SUBMITTED THAT THE AM OUNTS ADMITTED BY THE PARTIES DO NOT MATCH WITH THE BOOKS DIRECTLY BECAUSE OF THE MISUNDERSTANDING OF THE APPELLANT IN RECORDING THE SAME OVER DIFFERENT DATE S SO AS TO KEEP UNDER RS.20 000/ - . THE APPELLANT HAS ARGUED THAT THE ORDER OF THE AO SUFFERS FROM T HE VICE OF BEING BAD IN LAW AS NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN AND THE APPELLANT CAME TO KNOW OF THE INQUIRIES ONLY UPON RECEIPT OF THE ORDER. THE APPELLANT HAS FURTHER ARGUED THAT THE AO HAS NOT PROPERLY APPRECIATED THE ENTRIES GIVEN IN THE BOOKS OF ACCOUNTS WITH THE STATEMENT OF PARTIES AND HAS BY AN ERROR MISREAD THE SAME. 3.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE FACTS OF THE CASE. AT THE OUTSET IT IS SEEN THAT THE ARGUMENTS TAKEN BY THE L D. A.O. IN THE ORDER AS WELL AS DURING REMAND PROCEEDINGS ARE INCOHERENT AND DO NOT AFFORD AN EASY COMPREHENSION. IT IS NOT CLEAR AS TO WHICH SPECIFIC SECTION OF THE ACT HAVE BEEN INVOKED WHILE MAKING THE IMPUGNED ADDITIONS. UNDER THE PROVISIONS OF THE I. T ACT ADDITIONS TO RETURNED INCOME CAN ONLY BE MADE UNDER A SPECIFIC SECTIONS AND NOT GENERALLY. AN EXAMINATION OF THE FACTS OF THE CASE INDICATE THAT THE ISSUE IS REGARDING THE VERACITY OF LIABILITY APPEARING IN THE BOOKS OF THE APPELLANT ON ACCOUNT OF ADVANCES RECEIVED FROM CUSTOMERS. THUS ORDINARILY THE LIABILITIES WILL HAVE TO BE EXAMINED ONLY ON THE BASIS OF PROVISIONS OF SECTION 68 AS CASH CREDITS APPEARING IN THE BOOKS OF THE APPELLANT. ONCE SECTION 68 IS INVOKED THEN THE FACTS OF THE CASE WILL HAVE TO BE EXAMINED ON THE TOUCH STONE OF THREE BASIS CONDITIONS LAID DOWN IN THE SECTION VIZ. IDENTITY OF THE PERSON HIS/HER CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. DISCUSSIONS MADE IN THE ASSESSMENT ORDER INDICATE THAT THE AO HAS PRIMARILY NOT DISPUTED T HE IDENTITY OF THE PERSONS MAKING ADVANCES (EXCEPT THOSE WHO DID NOT APPEAR) CREDITWORTHINESS OF THE PERSONS AND THE GENUINENESS OF THE TRANSACTION. THE PRINCIPLE ARGUMENT OF THE AO IS THAT THE DATES OF PAYMENTS GIVEN IN THE STATEMENT DO NOT MATCH WITH TH E ENTRIES IN APPELLANT'S BOOKS ALONG WITH THE AMOUNTS. PERUSAL OF THE ORDER INDICATES THAT THE ID.AO HAS WHILE MAKING TWO DIFFERENT ADDITIONS OF RS.4 11 000/ (GROUND NO.1) AND RS.26 90 000/ - (GROUND NO.2) HAS IN A WAY ALSO COMMITTED THE ERROR OF MAKING DOU BLE ADDITION I.E. THE AMOUNT RECEIVED FROM THE PERSON FOR WHICH HE FOUND THAT EXPLANATION WAS ITA NO 443/AHD/2013 . A.Y. 2008 - 09 5 NOT SATISFACTORY HE MAKES AN ADDITION INCLUDING IT THE FIGURE OF RS.26 90 000/ - AND ALSO ADDING 10% OF THE AMOUNT IN THE FIGURE OF RS.4 11 000/ - . THE FOLLOWING IN STANCES ARE ILLUSTRATED AS UNDER: - (A) SHRI ARVIND B. KAJARIA'S NAME IS INCLUDED IN PARA - 4.2 AT PAGE NO.2 FOR THE ADDITION OF RS.4 11 000/ - AND AGAIN AT PARA - 10(A) ON PAGE - 9 TOWARDS ADDITION OF RS.26 90 000/ - . (B) THE NAME OF SHRI BADALAL K. SANKARIA'S NA ME IS INCLUDED IN PARA - 4.5 AT PAGE NO.3 FOR THE ADDITION OF RS.4 11 000/ - AND AGAIN AT PARA - 10(B) ON PAGE - 9 TOWARDS ADDITION OF RS.26 90 000/ - . (C) THE NAME OF SHRI DHIRUBHAI M. DALWADI'S NAME IS INCLUDED IN PARA - 4.8 AT PAGE NO.4FORTHE ADDITION OF RS.4 11 0 00/ - AND AGAIN AT PARA - 10(F) ON PAGE - 10 TOWARDS ADDITION OF RS.26 90 000/ - . (D) THE NAME OF SHRI PRABHUBHAI PARMAR'S NAME IS INCLUDED IN PARA - 4.16 AT PAGE NO.6 FOR THE ADDITION OF RS.4 11 000/ - AND AGAIN AT PARA - 10(E) ON PAGE - 10 TOWARDS ADDITION OF RS.26 9 0 000/ - . (E) THE NAME OF SHRI MATHURBHAI MORI'S NAME IS INCLUDED IN PARA - 4.15 AT PAGE NO.5 FOR THE ADDITION OF RS.4 11 000/ - AND AGAIN AT PARA - 10(N) ON PAGE - 12 TOWARDS ADDITION OF RS.26 90 000/ - . AT THE OUTSET A LIABILITY IS TO BE ADDED IN TOTO OR ALLOWED THERE CANNOT BE SCOPE FOR PART DISALLOWANCE LIKE 10% MECHANISM ADOPTED BY THE AO SINCE IT IS NOT AN ITEM OF INCOME AND EXPENDITURE WHERE AN ESTIMATION CAN BE MADE. WITHOUT PREJUDICE THE ABOVE ILLUSTRATES THAT AO HAS COMMITTED THE ERROR OR DOUBLE ADDITION WHICH IS NOT PERMISSIBLE. THUS THE ADDITION MADE BY THE AO THEREFORE CANNOT BE SUSTAINED. 3.3 WITHOUT PREJUDICE TO THE SAME IT IS SEEN THAT IT IS A SETTLED PRINCIPLE OF LAW EMANATING FROM AXIOMS OF NATURAL JUSTICE THAT OPPORTUNITY OF CROSS EXAMINATION I S A FUNDAMENTAL PRE REQUISITE IN EVERY LEGAL PROCEEDINGS WHEREVER THIRD PARTY STATEMENTS ARE RECORDED PARTICULARLY AT THE BACK OF THE ASSESSEE. THERE IS NO DENYING THE FACT AS OBSERVED IN THE CASE OF ENNEN CASTINGS PVT LTD VS M M SUNDARESH AND OTHERS AIR 2003 KANT 293 THAT 'CROSS - EXAMINATION IS THE MOST EFFECTIVE OF ALL MEANS FOR EXTRACTING TRUTH AND EXPOSING FALSEHOOD. THE OBJECT IS TO IMPEACH THE ACCURACY CREDIBILITY AND GENERAL VALUE OF THE EVIDENCE GIVEN IN CHIEF TO SIFT THE FACTS ALREADY STATED BY T HE WITNESS TO DETECT AND EXPOSE DISCREPANCIES OR TO ELICIT SUPPRESSED FACTS WHICH WILL SUPPORT THE CASE OF THE CROSS - EXAMINATION PARTY. THE EXERCISE OF HIS RIGHT IS JUSTLY REGARDED AS ONE OF THE MOST EFFICACIOUS TESTS WHICH THE LAW HAS DEVISED FOR THE DIS COVERY OF TRUTH. IT IS BEYOND ANY DOUBT THE GREATEST LEGAL ENGINE EVER INVENTED FOR THE DISCOVERY OF TRUTH. THE RIGHT OF CROSS - EXAMINATION BELONGS TO AN ADVERSE PARTY AND PARTIES WHO DO NOT HOLD THAT POSITION SHOULD NOT BE ALLOWED TO TAKE PART IN THE CROSS - EXAMINATION.'.. AS A GENERAL RULE EVIDENCE IS NOT LEGALLY ADMISSIBLE AGAINST A PARTY WHO AT THE TIME IT WAS GIVEN HAD NO OPPORTUNITY TO CROSS - EXAMINE THE WITNESS OR OF REBUTTING THEIR TESTIMONY BY OTHER EVIDENCE. WHEN TWO OR MORE PERSONS ARE TRIED ON TH E SAME INDICTMENT AND ARE SEPARATELY DEFENDED ANY WITNESS CALLED BY ONE OF THEM MAY BE CROSS - EXAMINED ON BEHALF OF THE OTHERS IF HE GIVES ANY TESTIMONY TO INCRIMINATE THEM. A DEFENDANT MAY CROSS - EXAMINE HIS CO - DEFENDANT WHO GIVES EVIDENCE OR ANY OF HIS CO - DEFENDANT'S WITNESSES IF HIS CO - DEFENDANT'S INTEREST IS HOSTILE TO HIS OWN - THOUGH THERE IS NO SPECIFIC PROVISION IN THE INDIAN EVIDENCE ACT PROVIDING FOR SUCH AN OPPORTUNITY FOR A DEFENDANT - RESPONDENT TO CROSS - EXAMINE A CO - DEFENDANT/CO - RESPONDENT HOWEVE R HAVING REGARD TO THE OBJECT AND SCOPE OF CROSS EXAMINATION IT IS SETTLED LAW THAT WHEN ALLEGATIONS ARE MADE AGAINST THE PARTY TO THE PROCEEDINGS BEFORE THAT EVIDENCE COULD BE ACTED UPON THAT PARTY SHOULD HAVE AN AMPLE OPPORTUNITY TO CROSS - EXAMINE THE PERSON WHO HAD GIVEN THE EVIDENCE AGAINST HIM. IT IS ONLY AFTER SUCH AN OPPORTUNITY IS GIVEN AND THE WITNESS IS CROSS EXAMINED THAT EVIDENCE BECOMES ADMISSIBLE. THEREFORE IT IS VERY CLEAR FROM THE AFORESAID PASSAGES THAT IT IS THE SETTLED LAW THAT NO EV IDENCE SHOULD BE RECEIVED AGAINST ONE WHO HAD NO OPPORTUNITY OF TESTING IT BY CROSS - EXAMINATION ; AS IT WOULD BE UNJUST AND UNSAFE NOT TO ALLOW A CO - ACCUSED OR CO - DEFENDANT TO CROSS - EXAMINE A WITNESS CALLED BY ONE WHOSE CASE WAS ADVERSE TO HIM OR WHO HAS GIVEN EVIDENCE AGAINST. IF THERE IS NO CONFLICT OF INTEREST SUCH AN OPPORTUNITY NEED NOT BE GIVEN. THEREFORE THE CONDITION PRECEDENT FOR GIVING AN OPPORTUNITY TO A DEFENDANT - RESPONDENT TO CROSS - EXAMINE A CO - RESPONDENT OR A DEFENDANT IS EITHER FROM THE PL EADINGS OF THE PARTIES OR IN THE EVIDENCE THERE SHOULD EXIST CONFLICT OF THE INTEREST BETWEEN THEM. ONCE IT IS DEMONSTRATED THAT THEIR INTEREST IS NOT COMMON AND THERE IS A CONFLICT OF INTEREST AND EVIDENCE HAS BEEN ADDUCED AFFECTING THE INTEREST OF THE CO - DEFENDANT/CO - RESPONDENTS THEN BEFORE THE COURT COULD ACT ON THAT EVIDENCE THE PERSON AGAINST WHOM THE EVIDENCE IS GIVEN SHOULD HAVE AN OPPORTUNITY TO CROSS - EXAMINE THE SAID WITNESS SO THAT ULTIMATELY TRUTH EMERGES ON THE BASIS OF WHICH THE COURT CAN ACT.......'. SO FAR AS CRIMINAL CASES ARE CONCERNED THE RIGHT TO CROSS EXAMINATION IS A CONSTITUTIONAL RIGHT WHEREAS IN CIVIL PROCEEDINGS IT IS A PRINCIPLE EMANATING FROM DUE PROCESS. IN THE CASE OF KI SHANCHAND CHELARAM VS CIT 125 ITR 713 (1980) HON'BLE A PEX COURT WHILE EMPHASIZING UPON THE NEED OF CROSS EXAMINATION HAVE ALSO HELD THAT '...IT IS TRUE THAT THE PROCEEDINGS UNDER THE INCOME - TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE AND THEREFORE IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTER IT COULD BE TAKEN INTO ACCOUNT AS EVIDENCE. BUT BEFORE THE INCOME - TAX AUTHORITIES COULD RELY UPON IT THEY WERE BOUND TO ITA NO 443/AHD/2013 . A.Y. 2008 - 09 6 PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMEN TS CONTAINED IN IT...'. CONSEQUENTLY THE ID. AO HAS COMMITTED SERIOUS ERROR BY NOT AFFORDING OPPORTUNITY CROSS EXAMINATION TO THE APPELLANT IN RESPECT OF EVIDENCES COLLECTED AT HIS BACK. IT IS NOTED THAT EVEN DURING THE REMAND PROCEEDINGS THE ID. AO HAS NO T COMMENTED ON THE ARGUMENTS TAKEN BY THE APPELLANT IN THIS REGARD. THUS IN THE VERY FIRST PLACE THE ADDITIONS MADE BY THE ID. AO BY NOT AFFORDING OPPORTUNITY OF CROSS EXAMINATION CANNOT BE SUSTAINED. 3.4. COMING TO THE FACTUAL ASPECTS OF THE CASE IT IS S EEN THAT IN MAJORITY OF CASES THE AMOUNTS STATED BY THE PARTIES IN THEIR STATEMENTS TALLY WITH THE AGGREGATE AMOUNTS RECORDED BY THE APPELLANT IN ITS BOOKS AS ALSO WITH THE AMOUNTS INDICATED IN THE REGISTERED SALE DEEDS: DURING THE COURSE OF APPELLATE PROC EEDINGS THE APPELLANT HAS FILED A CHART IN ITS PAPER BOOK WHERE THE ABOVE AMOUNTS WERE FOUND TALLYING IN MAJORITY OF CASES. THUS NO DISTURBANCE IS REQUIRED TO BE MADE IN RESPECT OF SUCH AMOUNTS. THUS THE CONDITION SPECIFIED U/S.68 ARE SATISFIED. EVEN THE ID. AO HAS NOT MADE ANY COMMENTS UPON THE LACK OF IDENTITY OF PERSONS OR THEIR CREDIT WORTHINESS ETC. WITHOUT PREJUDICE TO THE SAME IT IS SEEN THAT SOME OF THE PARTIES DID NOT COME FORWARD TO THE SUMMONS ISSUED BY THE AO. DURING THE COUR SE OF APPELLATE P ROCEEDINGS ALS O THE SAID PARTIES WERE NOT PRODUCED. THE APPELLANT'S SUBMISSIONS AND PAPER BOOK IS ALSO SILENT IN RESPECT OF THESE PERSONS. THUS SUMMONS ISSUED TO ONE SHRI SIRAJBHAI MANKAD (RS.1 50 000/ - ) MANISHBHAI NARHARIBHAI (RS.1 75 000/ - ) MEENABEN GO HEL (RS.35 000/ - ) SHRI BHARATBHAI A. KANJARIA (RS.75 000/ - ) AND SHRI SUNILBHAI (RS.1 00 000/ - ) REMAINED UNCOMPLIED. CONSEQUENTLY AT BEST ADDITION CAN BE SUSTAINED AS UNEXPLAINED LIABILITY ONLY IN RESPECT OF THOSE PERSONS WHO DID NO RESPOND TO AO'S NOTICE S SINCE IN ALL SUCH CASES A VALID PRESUMPTION ABOUT LACK OF IDENTITY AND CREDITWORTHINESS CAN BE MADE. THUS AS PER THE ASSESSMENT ORDER SIRAJBHAI MANKAD (RS.1 50 000/ - ) MANISHBHAI NARHARIBHAI (RS.1 75 000/ - ) MEENABEN GOHEL (RS.35 000/ - ) SHRI BHARATBHAI A. KANJARIA (RS.75 000/ - ) AND SUNILBHAI (RS.1 00 000/ - ) DID NOT RESPOND TO ENQUIRY LE TTERS ISSUED BY THE AO. THE AGGREGATE AMOUNT IN RESPECT OF THESE PERSONS COMES TO RS. 5 35 000/ - . IT IS ACCORDINGLY HELD THAT IN VIEW OF THE FACT THAT THE AGGREGATE AMOU NTS SHOWN BY THE APPELLANT AS RECEIVED FROM DIFFERENT CUSTOMERS TALLIES WITH THE AMOUNT OF SALE DEEDS AND WITH THE STATEMENT OF SUCH PARTIES THE ADDITION MADE BY THE AO OF RS.4 11 000/ - AND RS.26 90 000/ - CANNOT BE SUSTAINED IN ITS TOTALITY. THE ADDITION I S THEREFORE RESTRICTED TO THE EXTENT OF RS.5 35 000/ - (SI RAJBHAI MANKAD (RS.1.50 000/) MANISHBHAI NARHARIBHAI (RS.1 75 000/ - ) MEENABEN GOHEL (RS.35 000/ - ). SHRI BHARATBHAI A. KANJARIA (RS.75 000/ - ) AND SHRI SUNILBHAI (RS.1 00 000/ - ). ACCORDINGLY THE GROUND OF APPEAL BEARING NO. 1.1 1.2. 7.1 & 7.2. ARE PARTLY ALLOWED. 8. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. 9. BEFORE US LD. D.R. TOOK US THROUGH THE ORDER OF A.O AND POINTED TO THE VARIOUS FINDINGS OF A.O. HE SUBMITTED THAT A.O A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HAS RIGHTLY MADE THE ADDITIONS. HE FURTHER SUBMITTED THAT WHILE DELETING THE ADDITION LD. CIT(A) ON PERUSING THE CHART IN THE PAPER BOOK HAS STATED THAT THE AMOUNTS WERE FOUND TALLYING IN MAJORITY OF THE CASE S BUT NO SUCH CASES HAVE BEEN POINTED BY LD. CIT(A) IN THE ORDER. HE THEREFORE SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY A.O. HE THUS SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A. R. REITERATED THE SUBMISSIONS MADE BE FORE A.O AND CIT(A) AND FURTHER SUBMITTED THAT A. O HAD NOT GRANTED OPPORTUNITY OF CROSS - EXAMINATION TO THE ASSESSEE WITH RESPECT TO THE EVIDENCES THAT WERE COLLECT ED AT ITA NO 443/AHD/2013 . A.Y. 2008 - 09 7 THE BACK OF THE ASSESSEE WHICH WAS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. HE THUS SU PPORTED THE ORDER OF CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAS MADE THE ADDITION AFTER CONSIDERING THE STATEMENTS GIVEN BY THE VARIOUS CREDITORS AND ON THE BASIS OF THE BOOKS OF ACCOUN TS. BEFORE US ON BEHALF OF ASSESSEE IT IS SUBMITTED THAT THE STATEMENT AND EVIDENCES WERE RECORDED AT THE BACK OF THE ASSESSEE AND THE ASSESSEE WAS NOT GRANTED AN OPPORTUNITY TO CROSS - EXAMINE THE PERSONS. THE AFORESAID SUBMISSIONS OF THE ASSESSEE HAS NOT CONTROVERT ED BY REVENUE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT IN VIEW OF T HE PRINCIPLE OF NATURAL JUSTICE ASSESSEE SHOULD BE GRANTED ON OPPORTUNITY TO CROSS - EXAMINE THE PERSONS WHOSE STATEMENTS HAVE BEEN RELIED BY A.O. WE THEREFORE REMIT THE ISSUE TO THE FILE OF A.O AND DIRECT THE A.O TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THE CREDITORS AND ALSO MAKE AVAILABLE EVIDENCES ON WHICH HE HAS RELIED FOR MAKING THE ADDITIONS. WITH RESPECT TO THE DELETION OF ADDITION OF RS. 2 42 180/ - AND RS. 8 9 5 000/ - . WE FIND THAT CIT(A) HAS HELD TO BE A CASE OF DOUBLE ADDITION . BEFORE US REVENUE HAS NOT BEEN BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A) WITH RESPECT TO DOUBLE ADDITION . WE THEREFORE FIND NO REASON TO INTERFERE WITH RESPEC T TO THE ADDITION OF RS. 2 42 180/ - AND RS. 8 95 000/ - . THUS THIS GROUND OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 4 IS WITH RESPECT TO DELETION OF RS. 6 00 000/ - . 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION THE PARTNERS ACCOUNT A.O NOTICED THAT SHRI GANIBHAI V ADIA A PARTNER HAD INTRODUCED THE CAPITAL OF RS. 6 00 000/ - DURING THE YEAR. HE ALSO NOTICED THAT RS. 6 00 000/ - WAS NOT REFLECTED IN T HE PASS BOOK OF SHRI GANIBHAI. A.O THEREFORE CONSIDERED THE AMOUNT OF RS. 6 00 000/ - INTRODUCED BY THE PARTNER A S UNEXPLAINED INVESTMENT FROM UNEXPLAINED INCOME AND ADDED IT TO THE INCOME . AGGRIEVED BY THE ORDER OF ITA NO 443/AHD/2013 . A.Y. 2008 - 09 8 A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER: - 6.1 IT IS THE C ASE OF THE APPELLANT THAT ONE SHRI VAJUBHAI JANI WHO IS A PROMINENT POLITICIAN OF GUJARAT AND CLOSE ASSOCIATE HAD GIVEN A LOAN OF RS. 6 00 000/ - TO THE APPELLANT. HOWEVER BY MISTAKE THE ACCOUNTANT INSTEAD OF SHOWING IT AS UNSECURED LOAN CREDITED TO THE P ARTNERS CAPITAL ACCOUNT. IN SUPPORT OF HIS CONTENTIONS THE APPELLANT HAS FILED A COPY OF BANK PASS BOOK OF SHRI VAJUBHAI JANI AND BANK ACCOUNT OF APPELLANT FIRM SHOWING THE CORRESPONDING DEBIT/CREDITS. THE APPELLANT HAS ALSO SUBMITTED THAT SHRI VAJUBHAI JA NI HAD FILED BY POST HIS CONFIRMATION DTD. 27.10.2010 TO THE AO DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT HAS FURTHER SUBMITTED THAT IN THE SUBSEQUENT YEAR THIS MISTAKE WAS RECTIFIED AND THE BALANCE SHEET SHOWED THE AMOUNT AS LOAN FROM SHRI VAJUBHAI JANI. THE AMOUNT UNDER CONSIDERATION WAS REPORTED TO BE OUTSTANDING EVEN ON DATE AS EVIDENT FROM BALANCE SHEET OF THE APPELLANT FOR F.Y. 2010 - 11 COPY OF WHICH HAS BEEN FILED WHEREIN SHRI JANI HAS BEEN SHOWN AS LENDER OF UNSECURED LOAN. 6.2 I HAVE CAREFU LLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE APPELLANT. AT THE BOTTOM OF THE CONTROVERSY LIES THE ISSUE OF GENUINENESS OF A LIABILITY APPEARING IN THE BALANCE SHEET OF THE APPELLANT. ALL THE THREE INGREDIENTS OF SECTION 68 I.E. IDENT ITY OF THE PERSON HIS CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION STANDS SATISFIED. THE AMOUNT UNDER CONSIDERATION HAS PASSED THROUGH BANKING CHANNEL AND THE CREDITOR IS WELL IDENTIFIED. CONSEQUENTLY THE ADDITION MADE BY THE ID. AO CANNOT BE SUSTAIN ED. ACCORDINGLY THE ADDITION MADE BY THE ID. AO OF RS.6 00.000/ - IS DELETED AND THE GROUND OF APPEAL RAISED BEARING NO.6 STANDS ALLOWED. 12. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US. LD. D.R. SUPPORTED THE ORDER OF A. O AND FURTHER SUBMITTED THAT NO MATERIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO SUPPORT ITS CONTENTION THAT THE AMOUNT THAT WAS DEPOSITED BY THE PARTNERS WAS FROM THE LOAN RECEIVED FROM V AJUBHAI JANI. HE THEREFORE SUBMITTED THAT CIT(A) HAS ERRED IN D ELETING THE ADDITION. HE THUS SUPPO RTED THE ORDER OF A.O. THE LD. A .R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A) AND SUPPORTED HIS ORDER. BEFORE US LD. A.R. FURTHER SUBMITTED THAT IT CAN PRODUCE THE COPY OF THE CONFIRMA TION A ND THE BANK STATEMENT OF V AJUBHAI JANI IN SUPPORT ITS CONTENTION THAT THE AMOUNT THAT WAS DEPOSITED BY THE PARTNERS WAS I N FACT RECEIVED FROM V AJUBHAI JANI. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O HAD MAD E THE ADDITION OF RS. 6 LACS FOR THE REASON THAT THE AMOUNT ITA NO 443/AHD/2013 . A.Y. 2008 - 09 9 OF CAPITAL CONTRIBUTION WAS NOT REFLECTED IN THE BANK STATEMENT OF THE PARTNERS. IT IS ASSESSEE S SUBMISSION THAT THE AMOUNT WAS RECEIVED FROM SHRI V AJUBHAI JANI AND FOR WHICH ASSESSEE HAS ALSO PL ACED ON RECORD THE COPY OF THE CONFIRMATION FROM VAJUBHAI JANI AND THE COPY OF HIS BANK ACCOUNT. WE FIND THAT THE AFORESAID DOCUMENTS WERE NOT BEFORE THE A.O. WE ARE THEREFORE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE DOCUMENTS SUBMITTED BY THE LD. A .R. IN SUPPORT OF HIS CONTENTION THAT THE AMOUNT WAS RECEIVED FROM VAJUBHAI JANI AND REFLECTED IN HIS BANK ACCOUNT NEEDS TO BE EXAMINED AT THE END OF A.O. WE THEREFORE REMIT THE ISSUE TO THE FILE OF A.O TO VERIFY THE CONTENTION OF ASSESSEE AND IF THE CONT ENTIONS OF ASSESSEE ON THE BASIS OF AFORESAID DOCUMENTS ARE FOUND CORRECT THEN NO INTERFERENCE TO THE ORDER OF CIT(A) IS CALLED FOR. WE THUS DIRECT ACCORDINGLY. IN THE RESULT THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT THE APPEAL O F REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 14 - 11 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCO UNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD