ITA No.638 of 2007 1
IN THE HIGH COURTOF PUNJAB AND HARYANA, CHANDIGARH.
ITA No.638 of 2007
Date of decision: 16.1.2009
Commissioner of Income Tax-1,Ludhiana
....Appellant
vs.
Sanjeev Kumar Jain
. ..Respondent
CORAM: HON'BLE MR.JUSTICE J.S.KHEHAR.
HON'BLE MR.JUSTICE NAWAB SINGH.
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Present: Mr.Rajesh Sethi, Advocate, for the appellant.
Mr.Sandeep Goel, Advocate, for the respondent-assessee.
--
J.S.KHEHAR,J. (Oral)
The respondent-assessee filed his income tax return for the
assessment year 1996-97 on 30.4.2003. The Assessing Officer on
examining the same passed an order under sections 143/147 of the Income
Tax Act, 1961 on 31.3.2004, wherein while completing the assessment, he
made three additions to the declared income of the respondent-assessee,
namely, a sum of Rs.2,12,750/- allegedly earned by the assessee as a
consequence of purchase/sale of shares, a sum of Rs.1,03,317/- alleged to be
unexplained credits found in the bank account of the respondent-assessee,
as also a sum of Rs.30,000/- allegedly paid by the respondent-assessee for
the purchase of a plot.
It is not a matter of dispute that while arriving at the aforesaid
conclusions the Assessing Officer recorded at the back of the respondent-
assessee, statements of Shri H.S.Maheshwari, Shri Parveen Mittal, Shri
Sanjay Hasija and Shri Rajinder Gulati. It is also not a matter of dispute,
that before the aforesaid statements could be taken into consideration, it was
ITA No.638 of 2007 2
imperative for the Assessing Officer to confront the respondent-assessee
with the aforesaid statements. It is also not a matter of dispute that the
aforesaid statements were actually brought to the notice of the respondent-
assessee
The grievance raised by the respondent-assessee while
repudiating the determination rendered by the Assessing Officer, under
sections 143/147 of the Income Tax Act, 1961, has been that the
respondent-assessee had made repeated oral requests to the Assessing
Officer, seeking liberty to cross-examine the persons whose statements were
recorded by the Assessing Officer at his back. In fact, it is the case of the
respondent-assessee, that a written request was also made by the
respondent-assessee for the same purpose. Despite thereof, liberty was not
granted to the assessee to cross-examine either of the four persons whose
statements formed the basis of the determination of the Assessing Officer.
Dissatisfied with the determination rendered by the Assessing
Officer, the respondent-assessee preferred an appeal before the
Commissioner of Income Tax (Appeals). The aforestated appeal preferred
by the respondent-assessee, was accepted by the Commissioner of Income
(Appeals) by an order dated 15.9.2004. The aforesaid Appellate Authority
arrived at the conclusion, that it was imperative for the Assessing Officer
to allow the respondent-assessee to cross-examine all the persons whose
statements were recorded at his back, specially because they had formed the
basis of arriving at the conclusion that additional income earned by the
respondent-assessee, had not been depicted in the return filed by him.
Being aggrieved with the order passed by the Commissioner of
Income Tax(Appeals) dated 15.9.2004, the Revenue preferred an appeal
ITA No.638 of 2007 3
before the Income Tax Appellate Tribunal. For the same reasons, as had
been depicted in the order passed by the Commissioner of Income Tax
(Appeals) dated 15.9.2004, the Income Tax Appellate Tribunal, also passed
an order dated 7.12.2005. Consequent upon the dismissal of the appeal
preferred by the Revenue at the hands of the Income Tax Appellate
Tribunal, vide order dated 7.12.2005, the Revenue has approached this
Court.
Through the instant appeal, the Revenue has impugned the
order passed by the Commissioner of Income Tax (Appeals) dated
15.9.2004, as well as, order passed by the Income Tax Appellate Tribunal
dated 7.12.2005.
During the course of hearing, learned counsel for the Revenue
very fairly acknowledged, that the determination rendered by the Assessing
Officer was based on the statements of Shri H.S.Maheshwari. Shri Parveen
Mittal, Shri Sanjay Hasija and Shri Rajinger Gulati. Learned counsel for the
appellant also acknowledged, that neither of those individuals was permitted
to be cross-examined before the determination at the hands of the Assessing
Officer on 31.3.2004, whereby, the Assessing Officer had passed his
assessment order under sections 143/147 of the Income Tax Act, 1961. Thus
viewed, we have no hesitation whatsoever to uphold the determination
rendered by the Commissioner of Income Tax (Appeals) dated 15.9.2004, as
well as the order passed by the Income Tax Appellate Tribunal dated
7.12.2005.
Despite our aforesaid conclusion, it is the vehement contention
of the learned counsel for the appellant, that even if some procedural defect
had been found by the Commissioner of Income Tax (Appeals), as also by
ITA No.638 of 2007 4
the Income Tax Appellate Tribunal, rather than negating the entire action
taken by the Revenue, the Appellate Authorities should have annulled the
procedural defect, and remanded the matter for re-determination from the
stage when the defect made the subsequent determination unacceptable in
law.
We find merit in the aforesaid submission of the learned
counsel for the appellant. The Assessing Officer had failed to afford an
opportunity to the respondent-assessee to cross-examine the persons whose
statements were recorded by him, before passing the assessment order
under sections 143/147 of the Income Tax Act, 1961, on 31.3.2004. The
action of the Assessing Officer was unacceptable in law. Naturally, there
was nothing wrong upto the stage of recording the statements of the 4
persons referred to above. The proceedings conducted by the Assessing
Officer after recording the statements of the aforesaid individuals, are
liable to be set aside. The same alone are therefore, set aside. It will be open
to the Assessing Officer to re-initiate the proceedings from the aforesaid
stage if he is still of the same opinion. In the aforesaid eventuality, any
further action taken by the Assessing Officer would inevitably require him
to allow the respondent-assessee to cross-examine all the four witnesses
whose statements were the basis of the earlier consideration. Thereafter, it
will be open to the Assessing Officer, to pass a fresh order in accordance
with law. We would also like to clarify, that the instant liberty granted to the
Assessing Officer, to re-determine the issue would not enable him to collect
any further information, besides the material already available with him
(while passing the order dated 31.3.2004), for the purpose under reference.
In the totality of the circumstances, the instant appeal is
ITA No.638 of 2007 5
disposed of, with liberty to the Assessing Officer to re-initiate the
proceedings, as ordered hereinabove.
( J.S.Khehar)
Judge
(Nawab Singh )
Judge
January 16, 2009
rk