DELHI HIGH COURT – PR. COMMISSIONER OF INCOME TAX-5 VS. LAXMAN INDUSTRIAL
RESOURCES LTD.
ITA 169/2017, C. M. APPL.7385/2017
14TH MARCH, 2017
Core Fact of the Case:……….. The Income Tax Appellate Tribunal’s (ITAT) order
upholding the Appellate Commissioner’s opinion that the additions made in the
course of reassessments were unsustainable, were challenged by the Revenue. The
reassessment notice was issued to the assessee for AY 2002-03 on the ground that
information received from the Investigation Wing pointed to its being the
beneficiary of the accommodation entries that were subjected to addition under
Section 68. The Assessing Officer (AO), in the reassessment proceedings, added a
sum of Rs. 70,77,290/- . Upon appeal, the CIT(A) took note of the materials
filed by the assessee and provided an opportunity to the AO to remand
proceedings. The AO merely objected to the materials furnished but did not
undertake any verification. The CIT(A), found favour with the assessee, and
directed that the amounts brought to tax should be deleted.
Summarised Judgment: ………..This Court notices that the assessee had provided
several documents that could have showed light into whether truly the
transactions were genuine. It was not a case where the share applicants are
merely provided confirmation letters. They had provided their particulars, PAN
details, assessment particulars, mode of payment for share application money,
i.e. through banks, bank statements, cheque numbers in question, copies of
minutes of resolutions authorizing the applications, copies of balance sheets,
profit and loss accounts for the year under consideration and even bank
statements showing the source of payments made by the companies to the assessee
as well as their master debt with ROC particulars. The AO strangely failed to
conduct any scrutiny of documents and rested content by placing reliance merely
on a report of the Investigation Wing. This reveals spectacular disregard to an
AO’s duties in the remand proceedings which the Revenue seeks to inflict upon
the assessee in this case. No substantial question of law arises. The appeal is
dismissed.
Analysis: In the case of JSM also the Ld. Assessing Officer did not provide any
such information to the assessee to rebut the adverse material if any and he did
not afford any opportunity of cross examination of all the adverse material on
the basis of which impugned addition has been made in the assessment order. It
is settled proposition of law that the information gathered behind the back of
the assessee cannot be used against him unless until an opportunity of rebutting
the same is given to the assessee, It is against the principle of natural
justice.
