The Income Tax Appellate Tribunal (ITAT), Mumbai bench quashed the assessment order as no opportunity was given to the assessee for cross examination.
The assessee, Paramjit Singh Seehra is an individual and has filed his return of income for the impugned assessment year declaring total income of Rs.8,79,516. The return was processed under section 143(1) of the Income Tax Act. Subsequent to the information received from the Investigation Wing of the department based on the search and seizure operation conducted in the case of Cosmos group, the assessee’s case was reopened under section 147 of the Income Tax Act.
It is stated that the Cosmos group engaged in the business of building and construction was alleged to have been receiving on-money in cash over and above the registered price for sale of flats, shops or other commercial units on a regular basis. It is alleged that these cash were introduced in the books of Cosmos group as unsecured loan. It was further stated that the promoters of Cosmos group had admitted the modus operandi of receiving on-money in cash by way of statement recorded under section 132(4) of the Income Tax Act.
The same was also said to be admitted by the concerned sales head, head of the account and other chief promoters by way of statements. From the above statements, it is evidenced that the assessee was one of the beneficiaries and has paid Rs.70,00,000/- in cash over and above the registered price for a flat acquired at Phase 2, Block-C, Flat No.10 in Cosmos Hawaii Project.
In response to notice issued under section 148, the assessee has stated that the original return filed may be treated as return filed in response to notice under section 148 and objected to the reasons for reopening and the same was disposed of by the Assessing Officer. It is observed that the assessee has paid Rs.70,00,000 in cash as on-money on purchase of the said flat. The registered value of which was of Rs.52,76,414 and the same was added as cash credit under section 68 of the Income Tax Act. The assessee preferred appeal against the said order before the CIT(A). The CIT(A) confirmed the order of the Assessing Officer. Further aggrieved, the assessee is in appeal before the Tribunal.
A Division Bench consisting of Prashant Maharshi, Accountant Member and Kavitha Rajagopal, Judicial Member held that “The assessee has raised the issue that the assessee was not given an opportunity of cross examination of the two persons, viz. Manish Mehta and Meenal Patel of Cosmos group, whose statements were recorded under section 132(4) of the Income Tax Act. It is evident from this that the CIT(A) has also not given opportunity to the assessee to cross examine the parties. It is necessary to specify that the power of CIT(A) is co-terminus with that of the Assessing Officer. No doubt, the CIT(A), as a principle of natural justice, should have facilitated this opportunity of cross examining the parties by the assessee.”
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