Income Tax Appellate Tribunal - Ahmedabad
Nishant Construction Pvt. Ltd. , ... vs Assessee on 3 November, 2015
`IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, AHMEDABAD
(BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)
I.T. A. No. 1502/AHD/2015
(Assessment Year: 2011-2012)
Nishant Construction Pvt. V/S ACIT, Circle-5, Ahmedabad
Ltd., 801-802, Regency
Plaza, Anandnagar Road,
Satelite, Ahmedabad
(Appellant) (Respondent)
PAN: AAACN3752B
Appellant by : Shri S.N. Soparkar, A.R.
Respondent by : Smt. Vibha Bhalla, Sr. D.R.
(आदे श)/ORDER
Date of hearing : 12-08-2015
Date of Pronouncement : 03-11-2015
PER ANIL CHATURVEDI, ACCOUNTANT MEMBER
1. This appeal filed by the Assessee is against the order of CIT(A)-9, Ahmedabad dated 9.3.2015 for A.Y.2011-12.
2. The relevant facts as culled out from the material on record are as under.
3. Assessee is a company stated to be engaged as Real Estate Developer, Project Consultant etc. A survey u/s. 133A of the Act was carried out at the various premises of the Assessee and its related concern on 19.05.2011.
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. A.Y. 2011-2012
During the course of survey at the site office of Ratnakar IV, several documents were impounded and inventorised as Annexure BF-17. Among other things, a sheet of paper inventorised as page 130 of Annexure BF-17 was impounded which had mention of the rate of Rs 4,300 per sq. ft. and it gave descriptions of 3 bedroom, 4 bedroom and pent house in terms of their area. Another sheet of paper inventorised as page 129 of Annexure BF-17 pertained to sale of Flat No. C-1104 of Ratnakar III project of the Assessee which was pertaining to the flat sold to Ms. Indrani Roy and as per the consideration received shown on page 129, the rate as per sale deed worked out to Rs. 1,780 per sq. ft. instead of 4,300 per sq. ft. as mentioned on page 130 of Annexure BF-17 which, according to the A.O implied that Assessee had received only the amount as per sale deed by way of cheque payments and all the remaining amounts were received by way of cash i.e. "on money". Further, on the basis of enquiries conducted from the Office of the Sub-Registrar, Ahmedabad, AO noticed that it was revealed that some of the flats at Ratnakar III project were sold at the rate of around Rs 1400 per sq. ft as against the rate of Rs 4,300 per sq feet mentioned at page 130 of the Annexure BF17 that was recovered from the Site Office of Ratnakar IV of the Assessee. A.O also noted that Ratnakar III & IV projects of the Assessee were famous and prized housing projects of Ahmedabad located at most promising and established areas of City. To verify the current rate at which flats at Ratnakar III were being sold, A.O after referring to the web sites of property sale sites of 99 acres.com and magicbricks.com noted that the current market price of flat at Ratnakar III to be at Rs 6300 per sq ft and based on the price trend of the flats which were prevailing at the time of survey, the average market rate of the flats to be Rs 4304 per sq ft, which was also almost equal to the amount mentioned at page 130 of the 3 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 impounded paper. Ao was further of the view that when any sheet of paper or any document is recovered from the premises of an assessee at the time of survey, then there is a presumption that it belongs to the assessee and whatever is written pertains to the assessee and even the handwriting on the document is presumed to be of the assessee and the burden of disproving all the assumptions of being of assessee lies squarely on the person from whom the said paper is recovered and by just asserting that the said paper does not belong to it, the assessee cannot hope to have provided "clinching evidence"
to show that the same was neither owned by it or pertained to it and in view of the same, the submissions of the Assessee that it had not received any "on money" and page 130 did not bear the name of the Assessee and therefore cannot be held to be pertaining to Ratnakar III was also not found acceptable to the A.O. AO accordingly concluded that Assessee had received "on money" in relation to the sale of all its flat in Ratnakar III & IV. AO thereafter considering the prevailing market rates as per publicly available information on the websites and on the basis of impounded paper adopted the rate of Rs 4300 per sq feet and used it for calculating the actual consideration received by the assessee by multiplying it with the area of each flat. Based on the details furnished by the Assessee, the quantum of actual consideration received was worked out after reducing the amount disclosed by the Assessee and the excess consideration received was treated as "on money" and was apportioned to A.Y. 20111-2012 in the same proportion as the Assessee had apportioned it in its own Revenue recognition method worked out the "on money" for Ratnakar III project at Rs. 25,66,17,425/- and Rs. 6,19,80,980/- for Ratnakar IV project and thus made an aggregate addition of Rs. 32,56,98,405/-. Aggrieved by the order of
4 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:-
2.2 I have carefully considered the contentions of the appellant as well as the observation of the A.O. I have also gone through the laws relied upon by the appellant. After careful consideration of the facts of the case, as brought out by the assessing officer and the submissions relied upon by the appellant co-related with the various case laws, I am not inclined to agree with the contention of the appellant due to several reasons and loopholes in the contention and reasonings submitted by the appellant.
In my considered opinion the assessing officer has passed a well reasoned order after analysis of various factors cropped up during survey proceedings, the submissions filed at the time of assessment proceedings and analysis of market conditions with corroborative study from Internet and deriving the information that is available in public domain. The assessing officer has not solely relied on the impounded documents, but has also investigated further to verify the rates of properties available in the real estate market, it cannot be ignored.
In the assessment order the assessing officer has explained the key findings of the survey report in which a sheet of paper inventoried at Annexure BF - 17 was impounded. As per the said page on page number 130 of the said page gave description of the three- bedroom, and penthouse in terms of the area. Another sheet of paper inventoried as page number 129 of Annexure BF - 17 pertaining to sale of flat number C/ 1104 of written anchor -iii project of the assessee. The assessing officer has further pointed out that as per page 129 of Annexure BF-17 the consideration received as per sale deed worked out that Rs.1,780 /-per square feet instead of RS 4300/- per sq.ft. as seen from page 130 of Annexure BF-17. Meaning thereby that the appellant had been receiving the amount as per sale deed by cheque whereas, the cash amount received by it had not been reflected by the appellant in its books of accounts. On page 3 of the assessment order the assessing officer vide para-3.1 has worked out the flat area sale price and the price per sq.ft. which is not more than Rs.1,400/- per sq.ft. which is extremely low taking into consideration the current market rate going on ,at the time of sale of these properties. The assessing officer wide para-three at page 4 of the assessment order, has co-related the area of three-bedroom and four-bedroom flats given on the page impounded during 5 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 the course of survey proceedings and the actual area of the said flats. The assessing officer has pointed out that in the fifth line of page 130 of Annexure BF-17 the rate is mentioned at Rs. 4,300/- per sq. ft. The scheme of payment on the following lines are 35% on booking and rest of the amount i.e. 65% (in 21 installments). The A.O had brought out the fact, that when, this figure is read with in conjunction with other sheet of paper impounded from the same premises and inventoried, as page number 129 of Annexure BF 17 the things are clearly co- relatable. Page 129 of BF - 17 gives reference to the detail of transactions in respect of flat number C/ 1104 of ratnakar-111 project the sheet carries the names, PAN, and of buyers of flat total consideration and cheque payments. Area of the flat is 2610 square feet. The rate mentioned on page number 130 is Rs. 4300/- per square feet. The AO has worked out the actual consideration at the rate of Rs 4,300/- which comes to Rs 1,12,23,000/- whereas the consideration shown by the appellant in its books of accounts refects that the rate of flat per suare feet comes to Rs 1,777/- for this flat. Thus the assessing officer has brought out the important factor that the appellant had been in the practice of accepting 60% percent of the actual consideration in cash and 40% through cheques. The assessing officer therefore considered all the sale of Ratnakar III and Ratnakar IV by taking the actual rate of Rs.4,300/- per square feet and apportioning the resulting consideration as per the ratio of allocation of A.Y 2010-2111 and 2011 - 2012. With the result the assessing officer has worked out details of the total on money consideration received by the appellant during the assessment year concerned.
The assessing officer has also worked out in detail ,vide page number 9,10 and 11, 12 in which the assessing officer has analyzed the market trend of real estate in Ahmedabad and particularly the scheme of the appellant namely Ratnakar III as per popular real estate website 99 Acres.com and Magic bricks.com. A careful analysis of the facts brought out by the analysis of these real estate websites which are fairly and largely considered, to be authentic and .represents actual current market rates going on, in the field of real estate ail over India. Importantly these websites does not bifurcate the cash amount and cheque amount in the consideration, hence gives the fair idea of the current market rate going on for any particular area of any city of India including Ahmedabad. This analysis also reflects very strongly that the rate of flat ranging between Rs. 950 -Rs.
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. A.Y. 2011-2012
2000 per square feet in the Ratnakar III and Rs.1,500/- - Rs. 2.600/- per square feet in Ratnakar IV were grossly understated by the appellant.
The assessing officer has also analyzed the "RBl Monthly bulletin" of all bank of India in the issue of October 2012 which reflected the HPI depicting index value of flat at Ahmedabad during the concerned year which also matched with the analysis of our the assessing officer corroborating with websites of 99acres.com & magic bricks.com.
Vide para-3.1, the assessing officer has extensively elaborated the methodology adopted by the appellant and the bifurcation of on money received by the appellant and the rate of the flat per square feet on the basis of it with the logical extensive examples.
I am completely in agreement with the contention and the reasoning of the assessing officer to arrive at the conclusion and basis of on money received by the appellant during that year. The assessing officer has also categorically stated that the appellant has completely failed to rebut the logical conclusion of arriving the basis of the flat rate pertaining to the relevant assessment year at that particular time of the year 2010-11. In my considered opinion the appellant has failed to rebut attention of assessing officer by bringing evidence in respect of other assessing dealing in real in nearby area to strengthen its contention that it has not received any on money on the scene of flats in its different schemes. The appellant has also not come out any explanation of the noting in the impounded record wrt 65% and 35% payment scheme. The appellant has failed to negate the interpretation coming out of this noting. The appellant should have given detailed evidence, to contradict, that it's payment scheme is different from what has emerged from the impounded documents. It is clear that the appellant has failed to give logical reason for reflecting the rate of flat at very low price which does not match at all with the current market price going, on at that time even taking the very conservative view.
In my considered opinion the appellant has failed completely to give any logical reason of booking sale of flats which were located, in the most prime area of Ahmedabad in satellite area, which is very prominent and sought-after place in the Ahmedabad since last few years. Although prominent and prestigious housing projects, have been started in the satellite or around satellite area in the recent past in the Ahmedabad. It is beyond understanding that, why any prudent businessman, would sale the flats located in such a 7 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 prestigious and most sought-after locality at that low price which are not believable at all as at that time the market pertaining to real estate was not at all sluggish. Apart from the fact that the case of the appellant could not negate the rate of Rs.4,300/- per square feet adopted by it after analyzing and bringing the logical basis of it, with the evidence of any other housing project situated in satellite area or around satellite area.
The case laws relied upon by the appellant have been considered but the same are on a different facts. The appellant has not solely relied upon the report of the direct investigation but has also incorporated, the analysis and its basis of different factors of current market rate going on, as mentioned in the assessment order. Hence this is incorrect on the part of the appellant to state that the assessing officer has not carried out cross enquiries.
The appellant has stated in its submission that the survey report cannot be relied upon which is incorrect. The survey report is a vital document having information with regard to the working of appellant. The survey report also cannot be brushed aside as it is based on facts and evidence available at the time of survey proceedings. The assessing officer has given stepwise reasoning based with concrete facts to arrive at the figure of Rs.4,300/- per square feet and the appellant has completely failed to negate this working of the assessing officer with the clinching and cogent evidence.
It is pertinent to mention a similar case namely the M/s Sambhav Infrastructure Private Limited in assessment year 2012 -2013 a survey had taken place on 24/10/2011, Interestingly M/s. Sambhav infrastructure Private Limited also is indulged in the housing project situated in the same satellite area in the close vicinity of the projects namely Ratnakar carried out by the appellant. M/s. Sambhav infrastructure Private Limited has been carrying on the projects in the name of Stavan altiza, Stavan paradise, Stavan arise. The relevant facts of M/S Sambhav Infrastructure Private Limited are as below:
Survey u/s. 133A of the Act was conducted at various premises of the assessee company on 24/10/2011. During the course of survey proceedings at 501,502, Safal Prelude Prahladnagar, Ahmedabad contain papers inventorised as Annexure A-l, A-2, A-3 and A- 4 were impounded. Unaccounted cash receipts of Rs.20,01,00,000/- in respect of Stavan Alteza, Stavan Paradise and Stavan Arise schemes of the assessee company are reflected in these papers. In the statement dated 24lh October, 2011, Shri Mihir P. Desai, director
8 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 of the assessee company clearly admitted and declared Rs.20,01,00,000./- as unaccounted income of the assessee company for F. Y.2011-12. In the statement dated 24th October, 2011 recorded during the course of survey proceedings, the director of the Company Shri Mihir P. Desai had clearly admitted the said unaccounted income of Rs.20,01,00,000/-. The relevant portion of the statement is reproduced as under:
....................
A careful study of the statement of managing director of M/s. Sambhav Infrastructure Private Ltd. and the statement of site engineer at Stavan Arise. Shri Kunal Soni and Shri Jayendra Keshavlal Patel, Site Supervisor at Stavan Paradise, shows that there is definitely a strong element of on money being the received by the owners which is regular practice. In the statement Shri Kunal Soni has also accepted the practice of consideration of sale of flat been received in the ratio of 60% cash and 40% in cheque. As per the statement of Shri Kunal Soni the rate of cost of that in at Stavan Paradise comes to Rs. 3851 per sq. ft. as the flat area is 1350 sq. ft. Further as per the statement of Shri Jayendra Keshavlal Patel, Site Supervisor at Stavan Paradise the Flats at Stavan Paradise Scheme are sold at a price of Rs. 1.4 to Rs. 1.5 crore per flat. However, the sale of flats of stavan Paradise Scheme has been recorded in the books of accounts in the range of Rs. 30,00,000/- to Rs. 44,50,000/-.
In view of the facts as emerged from the of M/s. Sambhav Infrastructure Private Limited it is proven beyond doubt that the practice of accepting on money is rampant in of real estate, which cannot be denied at all in contrast to the contention of the appellant that it has not at all practice seeming on money and the piece of document found that the prices of the appellant not show the appellant's at all. The Acceptance of the managing director in the case of M/s Sambhav Infrastructure Private Limited is very vital and it further strengthen the officer's contention in the case of appellant that the factor of on money is existing in the case of the appellant.
Hence after careful consideration of detailed as emerged from the and the assessment order and the submission of the appellant, the case laws relied upon by the appellant, I am of the opinion that the assessing officer has rightly made addition of Rs. 32,56,98,405/- in the hands of appellant on account of on money by it during assessment year. Accordingly this ground of appeal is dismissed.
9 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 With regard to the appellant's additional contention of treating the on money its bifurcation cannot be accepted as it has not come out with any detail as to how much revenue it has recorded on account of flat sale and on money recognized by it in its books of account. Since appellant's ground regarding addition of on money is dismissed by me the appellant's additional contention raised as above does not survive.
4. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds:-
1. Ld. CIT (A) erred in law and on facts in confirming addition of alleged on money receipt of Rs. 25,66,17,425/- in respect of Rantakar III scheme and Rs. 6,90,80,980/-
in respect of Ratnakar - IV scheme totaling to Rs. 32,56,98,405/- merely on the basis of notings found on a dumb document being page no. 130 of Annexure BF -17 ignoring submission of the appellant and heavily relying on the survey report. Ld. CIT (A) ought to have considered submissions of the appellant and deleted addition made on the basis of dumb document without bringing any corroborative evidence on record. It be so held now.
2. Ld. CIT (A) erred in law and on facts in confirming finding of the AO in respect of market rate adopted from website namely 99acres.com and magicbrics.com ignoring fact that above website are not authenticated by government authority and cannot be the basis for making any addition. Ld. CIT (A) further, erred in comparing market rate obtained from 99acres.com which is in respect of resale of property. Ld. CIT (A) ought not to have confirmed the findings of Id. AO on this basis. It be so held now.
3. Ld. CIT (A) erred in law and on facts in confirming addition made by AO merely on the basis of page no. 130 of Annexure BF - 17 which does not contain name of the appellant, name of the project etc. Ld. CIT (A) ought not to rely on rate written on loose paper as appellant demonstrated other fact like size of flat, type of flat in appellant's projects are not similar to that of appellant. It be so held now.
4. Ld. CIT(A) erred in law and on facts in confirming addition made by AO on assumption that the appellant would have charged on money by applying unrealistic and uncorroborated rate of Rs.4300 per sq.ft.
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. A.Y. 2011-2012
5. Ld. CIT(A) has failed to appreciate that comparison made by learned A.O. on the nexus between the two pages is factually incorrect in view details submitted.
6. Ld. CIT (A) erred in law and on facts in making reliance on survey statement o directors and others of a third party namely M/s Sambhav Infrastructure Pvt. Ltd. without confronting the same to the appellant as appellant has no business connection with said company and no two schemes even in same locality ha: identical area, rate and other factors etc. The ld CIT(A) erred in confirming the addition based on such statement of third party It be so held now.
7. The Id CIT(A) erred in law and on facts in making irrelevant observations at para 2.2 regarding general practice of on money so as to uphold the erroneous addition made by the AO and wrongly agreed to the contention and reasoning of the AO to make conclusion and basis of alleged on money without any iota of evidence. It be so held now.
8. Without prejudice to above the Ld. CIT (A) erred in not properly considering the alternative plea of the appellant that even in a case of on money actually proved to be received it is only net profit which could be added and not the entire amount of such actual on money. The Id CIT (A) failed to appreciate the case laws cited in this regard. It be so held now.
9. Ld. CIT (A) erred in law and on facts in not considering various submissions made to AO which are reiterated before her and in affirming the addition of Rs.32,56,98,405/- merely on conjectures and surmises. Ld. CIT (A) ought to have considered submission of the appellant submitted during assessment proceedings and appellate proceedings and ought not to confirm the addition in respect of on money receipt. It be so held now.
10. Levy of interest u/s 234A, 234B&234Cof the act is not justified.
11. Initiation of penalty proceedings u/s 271 (l)(c) is unjustified
5. Before us, at the outset, ld. A.R. submitted that though various grounds have been raised, but the first ground is only effective ground for adjudication.
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. A.Y. 2011-2012
6. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that in the present case addition on account of alleged "on money" has been made on the basis of presumption and the only basis of addition is page 129 and 130 of Annexure BF-17 which was found during the course of Survey. He submitted that page 130 of Annexure BF 17 which has been the basis of making the addition is a "dumb document" and cannot be considered for the purpose of making addition in view of the fact that at the time of Survey itself, Assessee had denied that the paper belong to it, the paper to be not in the hand-writing of any of the Directors or the Employees of the Assessee, no reference in the document about the Assessee or its Directors nor any reference to the Scheme Ratnakar III and further the document did not bore any date and therefore it is not known as to which period it pertained to. He further submitted that the details contained in the impounded document could not be linked to Ratnakar III Scheme of the Assessee because in the the impounded document there was reference to Penthouse but on the other hand in Ratnakar III Scheme that was constructed by the Assessee there was no Penthouse. He further submitted that the area of the bed rooms referred to in the impounded document were also different than the area of bedrooms of Ratnakar III Scheme. He also submitted that the terms of payment do not match to the terms of payment as per another impounded paper in the case of Mrs. Indrani Roy. The ld. A.R. further submitted that during the course of Survey no other material was found which could substantiate or prove that Assessee has received any amount in excess of what is declared in the books of accounts and further A.O had made no independent inquiry and had merely relied upon the report of the Survey team. He further submitted that as far as payment of "on money" was concerned, AO had also not examined any of 12 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 the member to whom the assessee had sold flats and that there was no basis to assume that Assessee would have charged "on money" in relation to Ratnakar IV Scheme also. He also pointed to the document found at the time of Survey which is placed at page 57 of the paper book. He therefore submitted that the presumption of receipt of "on money" by the assessee, on the basis of notings on page 30 of the document pertaining to scheme built and developed by the Assessee was merely on the basis of guess work. He further submitted that the Revenue has not carried out cross inquiry with Mrs. Indrani Roy and others in respect of Flat No. 4-1104 of Ratnakar III to establish the allegation about the nexus between the impounded loose paper page no. 130 & 129 of Annexure BF-117. He further submitted that no incriminating material in respect of unaccounted booking receipt received from any Members of Ratnakar III Scheme was found during the course of Survey proceedings and even the impounded page no. 129 nowhere has the notings with respect to any cash payment by the Member in respect of Flat No. C-1104 of Ratnakar III Scheme. He further submitted that there is no incriminating material found which could have been used against the Assessee. He further submitted that the Revenue, relying upon page 130 Annexure BF-17 has presumed that Assessee has received on money in respect of each and every flat of the Scheme of Ratnakar III which is purely on the basis of surmises and conjectures and the same is not sustainable under the provisions of Income Tax Act. He therefore submitted that in the absence of any cogent material evidences and/or independent clinching evidences as regard to the receipt of "on money" collected by assessee from the Members of Ratnakar III Scheme that was build and developed by the Assessee, is contrary to the realities of the transaction and that mere existence or reason for suspicion would not tantamount to evidence and or 13 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 material and any addition made on that ground is inadmissible. With respect to the addition being confirmed by ld. CIT(A). Ld. A.R. submitted that ld. CIT(A) in the order had referred to a case of Sambhav Infrastructure P. Ltd that was decided by him and based on the facts of that case and the statements recorded therein drew the conclusion about the practice of accepting of "on money" being rampant in the business of Real Estates. He further placed reliance on the following decisions:-
(i) ACIT vs. Sharad Chaudhary (2015) 55 Taxman.com 324 Delhi Tribunal
(ii) CIT vs. Maulik K. Shah (2008) 307 137 (Guj)
(iii) CIT vs. Discovery Estate P. Ltd. ITA No. 1089/A/2011 order dated 18.02.2013 Delhi High Court
(iv) Rajdeep Builders vs. ACIT (2012) 52 SOT 62
(v) Cit vs. Dolphin Builders P. Ltd. (2013) 356 ITR 420 (M.P)
7. He further submitted that all the transactions are through Registered Deed and the books of accounts have also not been rejected. He therefore submitted that the entire addition has been based on the basis of suspicion and without any material evidence and therefore the same needs to be deleted. The ld. D.R. on the other hand strongly supported the order of A.O and ld.CIT(A) and further submitted that Assessee has not placed any material on record to demonstrate that the documents found from the premises of Assessee did not belong to Assessee and that the A.O and ld.
CIT(A) after considering the fact that prices available and as available in the public domain had rightly the additions.
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8. We have heard the rival submissions and perused the material on record. In the present case, it is an undisputed fact that during the course of survey papers were found from the Assessee's premises and were impounded and based on those papers additions have been made. We find that A.O apart from the papers found had also considered the prices of properties as available in the public domain like 99 acres.com, magic bricks.com and other public documents as stated in his order, to arrive at the conclusion that Assessee had indeed received "on money". We also that ld. CIT(A) had upheld the order of A.O and to support the order of A.O, she also drew support from the order passed by her in the case of Sambhav Infrastructure Pvt. Ltd. for A.Y. 2012-13 where according to her, a similar survey action had taken place and the additions were confirmed. Before us, there is no material which could show that the information as found in public domain was confronted to the Assessee and Assessee's views were obtained and thereafter the submissions of Assessee were rejected by passing a speaking order. Further there is nothing on record to also demonstrate that Assessee was confronted by ld. CIT(A) with the facts of Sambhav Infrastructure Pvt. Ltd. (supra) and after considering the submissions of Assessee with respect to the observations made in Sambhav Infrastructure (supra) as to how it would apply to the facts of Assessee the additions were upheld. It is a settled law that the principles of natural justice requires that Assessee should have knowledge of the material that is going to be used against him so that he may be able to meet it before any material is used against it and therefore ld. CIT(A) was obliged to put the material to the Assessee before making any decision adverse to it. In the present case, the materials based on which the additions have been made namely the data obtained from external sources and the decision of Sambhav Infrastructure (supra) does not seem to have 15 ITA No 1502/Ahd/2015 . A.Y. 2011-2012 been confronted to Assessee. It is pertinent to observe that for adjudicating any controversy, the adjudicator is required to follow either deductive reasoning method or inductive reasoning method. In the first principle the adjudicator will draw inference in support of his conclusion based on the material already available on record, under the 2nd method, in support of his conclusion, he will induct some material namely data, commentary about any concept etc. In the present case, ld. CIT(A) has followed the 2nd method but failed to establish the nexus from that material vis-à-vis the case of the Assessee while arriving at the conclusion and secondly, as observed earlier, failed to provide opportunity of hearing to the Assessee on that material. In view of these facts, we are of the view that the matter needs to be re- adjudicated by ld. CIT(A) by following the principles of natural justice. Needless to state that ld. CIT(A) shall grant adequate opportunity of hearing to the Assessee. The Assessee shall also be free to place any submissions or details in its support to present its case. Thus this ground of Assessee is allowed for statistical purposes.
9. In the result, the appeal of Assessee is allowed for statistical purposes.
Order pronounced in Open Court on 03 - 11 - 2015.
Sd/- Sd/-
(RAJPAL YADAV) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad. TRUE COPY
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -