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Judgment
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The assessee has filed appeals against the orders of the Learned Commissioner of Income Tax (Appeals)-3, Noida [“Ld. CIT(A)”, for short] dated 25.07.2025, 11.08.2025 and 13.08.2025 for the Assessment Years 2017-18, 2018-19 and 2020-21 respectively.
Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order. We take ITA No.6052/Del/2025 for AY 2017-18 as lead case.
The assessee has taken the following grounds of appeal in AY 2017-18 :-
“1)That the learned CIT(A) erred in law and on facts in upholding the re-opening of assessment u/s 148 of the Act, which was done on the basis of borrowed satisfaction only without independent application of mind by the Assessing Officer.
2)That the notice issued u/s 148 of Income Tax Act for re-opening of the assessment is illegal and is liable to be annulled as assessee had disclosed fully and truly all the material facts at the time of filing original ITR. Assessment re-opened u/s 147 is highly unjustified, without application of mind and is illegal. In fact, there was no reason to believe for reopening of the case u/s 148 but reopened only in surmises and suspect.
3)That the notice u/s 148 was issued by the Assessing Officer, Meerut, instead of the designated Faceless Assessing Officer, which is contrary to law and lacks jurisdiction.
4)That the initiation of proceedings u/s 147 / 143(3) r.w.s 1448 are illegal, without jurisdiction, mechanical, without application of mind and based on borrowed satisfaction only.
5)That the addition of Rs.75 lakhs made u/s 69A on account of alleged unexplained cash payment for immovable property is unjustified, arbitrary, and made without corroborative evidence. The appellant had already disclosed payment of Rs.33 lakhs as advance through banking channels, which has not been disputed.
6)That the learned CIT(A) has erred in upholding the addition based only on the basis of a dumb document (an excel sheet) of the third party. No other cogent documents or details have been brought on record by the department to substantiate that the amount of alleged money has been paid in cash. Reliance on such third-party documents is unjustified and contrary to settled law.
7)On the facts and circumstances of the case, the learned CIT(A) has erred on facts and in law in upholding the addition made by Assessing officer on the basis of material collected at the back of the appellant without giving an opportunity to the appellant to rebut the same and also cross examination denied is in violation of the principle of natural justice.
8)That the reassessment order was passed without jurisdiction, illegal and bad in law, since sanction obtained under section 151 had been accorded in a mechanical manner.
9)That the assessment as well as the appellate order passed are prejudicial to interest of the appellant and against the principles of natural justice as both orders suffer from serious procedural Infirmities.”
First we take up legal issue raised by the assessee in the ground no.7 wherein assessee has challenged that the learned CIT (A) has erred on facts and in law in upholding the addition made by Assessing officer on the basis of material collected at the back of the assessee without giving an opportunity to the assessee to rebut the same and also cross examination denied is in violation of the principle of natural justice.
At the time of hearing, ld. AR of the assessee submitted that the persons whose statements were recorded for drawing adverse inference against the assessee were not offered opportunity for cross examination to the assessee, though requested by the assessee during re-assessment proceedings. He further submitted that assessee has not been offered for cross examination. He submitted that unless opportunity of cross examination provided, the assessment based on these statements will be nullity. He submitted that whatever information passed by the DCIT (Inv)-2, Chandigarh, it is totally wrong, unwarranted and bad in law because assessee had not paid any cash component. He submitted that the Assessment Unit has done the guess work because it did not find any incriminating document regarding cash payment which is signed by the assessee and whatever excel sheet found by the DDIT/ ADIT(Inv)-2, Chandigarh did not belong to assessee. He further submitted that the reopening of the assessment has been done on surmises and conjecture basis. In this regard, he relied on the following decisions :-
Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC).
Hon'ble Supreme Court in C. Vasantlal and Co. v. CIT [1962] 45 ITR 206 (SC)
Commissioner of Income Tax vs. M/s Odeon Builders Pvt. Ltd. (SC) [418 ITR 0315]
ANUBHAV JAIN VERSUS I.T.O, WARD 35 (5) NEW DELHI, I.T.O, WARD 35 (4) NEW DELHI [2018 (11) TMI1487 -ITAT DELHI
Smt. Jyoti Gupta Versus The I.T.O, Delhi - 2018 (11) TMI 1353 - ITAT NEW DELHI Accordingly, he pleaded that reopening of the assessment may be quashed.
On the other hand, ld. DR of the Revenue objected to the same and relied on the orders of the authorities below.
Considered the rival submissions and material placed on record. Before us, assessee has raised the issue of jurisdiction with the submission that the Assessing Officer has reopened the assessment solely on the basis of statements of the persons whose statements were recorded for drawing adverse inference against the assessee were not offered for cross objection to the assessee. We observed that the assessee has asked for opportunity of cross-examination. However it was not extended to the assessee, even though specific request was made during reassessment proceedings. It is fact on record that addition was made in the hands of the assessee purely on the basis of the statements of the persons. It is well settled law that not providing opportunity of cross-examination is against the principles of natural justice and the addition was made purely on the basis of statement of third party and making addition in the hands of the assessee without there being any opportunity to the effected person. We observed that Hon’ble Supreme Court in the case of Andaman Timber Industries vs. CIT (supra) has dealt with this issue and held as under :-
“6.According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.”
Following the aforesaid precedents, in our considered view, the reopening of the assessment is beyond jurisdiction and bad in law, not providing opportunity to the assessee for making addition based on third party statement. Therefore, we are inclined to quash the assessment and allow ground no.7.
Since we have quashed the assessment on the legal issue, the other grounds raised have become academic, hence not adjudicate.
In the result, the appeal of the assessee for AY 2017-18 is allowed on the above terms.
Since the facts in AY 2017-28 are exactly similar to Assessment Years 2018-19 & 2020-21, our above findings in AY 2017-18 are applicable mutatis mutandis in Assessment Years 2018-19 & 2020-21. Accordingly, the appeals filed by the assessee for AYs 2018-19 & 2020-21 are allowed.
To sum up : all the three appeals filed by the assessee are allowed as above.