Bombay High Court
Fire Arcor Infrastructure Pvt. Ltd., ... vs Commissioner Of Income Tax, Cntral ... on 23 July, 2019
Author: S. M. Modak
Bench: Sunil B. Shukre, S. M. Modak
1/8 ITL.30.2018.(Judg)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
INCOME TAX APPEAL NO. 30 OF 2018
Fire Arcor Infrastructure Pvt. Ltd.
Having its office at 120/2 Kothewada,
Nagpur -441 114. ... APPELLANT
VERSUS
Commissioner of Income Tax, Central
Circle-2(1), Nagpur. ... RESPONDENT
Mr. S. S. Dewani, Advocate for Appellant.
Mr. S. N. Bhattad a/w Mr. A. J. Bhoot, Advocate for Respondent.
CORAM : SUNIL B. SHUKRE AND
S. M. MODAK, JJ.
RESERVED ON : JULY 10, 2019.
PRONOUNCED ON: JULY 23, 2019
JUDGMENT [PER : S. M. MODAK, J.]
. Income Tax Appellate Tribunal, Nagpur vide order dated 29 th
June 2017 dismissed the Appeal of the Appellant - Assessee and thereby
in turn confirmed the order dated 27th March 2015 passed by the Assistant
Commissioner of Income Tax, Central Circle - 2(1), Nagpur.
2. Vide said order, the Assistant Commissioner included
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Rs.1,50,00,000/- being unaccounted investment in the total income of the
Assessee. He further directed to initiate penalty proceedings. There is an
appeal preferred against the said order before the learned Commissioner
of Income Tax (Appeals) -3, Nagpur. The Appellant - Assessee could not
convince him and the Appeal came to be dismissed on 30 th November
2016. Even the Appellant could not succeed before the Income Tax
Commissioner as mentioned above. All these decisions are challenged
before us.
3. The Appellant - Assessee has agreed to purchase land from
one M/s Jagdamba Realtors Private Limited. There was one Memorandum
of Understanding executed on 13th March 2007. Total consideration was
Rs.6,00,34,846/-. Out of that, Appellant - Assessee paid Rs. 4,50,34,864/-.
The Appellant - Assessee also submitted his return for relevant assessment
years. There was a raid conducted at several offices of M/s Jagdamba
Realtors Private Limited on 7/3/2013 and 30/4/2013. Various
incriminating documents were seized. One of them is the copy of
Memorandum of Understanding dated 13th March 2007 as referred above.
4. The Income Tax authorities noticed a reference of payment in
cash of Rs.1,50,00,000/- by the Appellant - Assessee to the said M/s
Jagdamba Realtors Private Limited. This gave a cause of action for the
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Income Tax authorities to issue notice on 4th August 2014 to the Appellant
- Assessess. The Appellant - Asessee was asked to file a return for the
assessment year 2008-09, thereby disclosing true and correct income. The
Appellant - Asessee gave explanation. But, it was not accepted by the
Assessment Officer so also by the Appellate authorities as mentioned
above.
5. The Appellant - Assessee challenged the said assessment
before the Appellate authorities on merits. According to him, there is a
over-writing in the Memorandum of Understanding by including a
reference of payment of Rs.1,50,00,000/-. In this Appeal we are not
supposed to make any comment about the merits of the matter. The issue
before us is very limited. Whether the Appellant was given an opportunity
to cross-examine the partner Mr. Gopal Kondawar, Director of M/s
Jagdamba Realtors Private Limited and whether it has caused prejudice to
the Appellant due to denial of opportunity to cross-examine.
6. On 10th July 2019 after hearing both the sides, we have
framed two questions of law. We have also heard Mr. S. S. Dewani, the
learned Counsel for Appellant and Mr. Bhattad, the learned Counsel for
Respondent.
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4/8 ITL.30.2018.(Judg)
GRIEVANCES
7. There are two grievances. One is non-supply of documents
including the statement of Gopal Kondawar to the Appellant - Assesses
and second is denial of an opportunity to cross-examine him. The first
grievance is not agitated before us seriously. When we have perused the
documents, We are also satisfied that the first appellate authority i.e.
Commissioner of Income Tax has supplied the documents to the Appellant
- Assessee. We find reference in the observations made by the learned
Commissioner of Income Tax on page No. 52 of the Paper book and
Paragraph No. 14 to that effect. He observes :
"copies of statements of Mr. Gopal Kondawar were
given to the Assessee during the appellate proceedings".
So, the issue only remains whether there was denial of an opportunity to
cross examine said Gopal Kondawar.
RIGHT OF CROSS-EXAMINATION
8. There is a dispute amongst the parties on this issue. Assessee
claims that he had shown willingness to cross-examine the said Gopal
Kondawar in earlier proceedings, whereas the Respondent contends that
this grievance was not made earlier. When we have perused the record,
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we find that such grievance was made in the earlier proceedings. We have
scrutinized the record of all the three proceedings made available to us.
There is willingness shown to cross-examine Mr. Gopal Kondawar by way
of a letter dated 4th March 2015. This letter is disputed. We also do not
find any convincing evidence about giving of this letter. We do not accept
it. We have perused the Memo of Appeal filed before the Commissioner of
Income Tax and (First Appeal) in Paragraph No.5 of the statement of facts
attached to the said Memo of Appeal, we find reference about the
grievance made about denial of opportunity to cross-examine.
9. With the assistance of both the sides, when we have read the
order passed by the leaned Commissioner of Income Tax, we do not find
any where observation made about opportunity to cross-examine Mr.
Gopal Kondawar. We have also perused the Memo of Appeal filed before
the learned Appellate Tribunal (Second Appeal). The grievance about
denial of cross-exponentiation was made in Paragraph No. 7 of the
grounds of facts.
CONCLUSION
10. The above facts clearly shows that specific grievance was
made about the willingness to cross-examine Mr. Gopal Kondawar. The
objection taken on behalf of the Respondent needs to be negated. In order
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to support their contention about the right to cross-examine witness, the
leaned Counsel for the Appellant relied upon the Judgment delivered by
the Hon'ble Supreme Court in case of Andaman Timber Industries V/s
Commissioner of C. Ex., Kolkata-II, Decided on 2 nd September 2015 in
Civil Appeal No. 4228 of 2006. There was a proceedings relating to the
payment of central excise. The Assessee made grievance about denial of
an opportunity to cross-examine the buyers. Denial of such an opportunity
is a serious flaw rendering the order as a nullity. Hence the Hon'ble
Supreme Court set-aside the impugned orders.
PROVISIONS OF INCOME TAX ACT
11. With the assistance of both the sides we have perused the
provisions of Income Tax Act. Section 131 empowers the prescribed
authorities to do certain things. Clause (b) of Section 131 empowers the
authorities to enforce the attendance of a person. It is for the purpose of
examining him on oath. Whereas the provisions of Section 136 equates
the proceedings before the Income Tax authorities to judicial proceedings.
Net result is that, Income Tax authorities can certainly record the
evidence.
12. The investigating team has recorded statement of said Gopal
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Kondawar on three occasions. They are on 10/4/2013, 31/5/2013 and
7/6/2013. The Appellant - Assessee has made grievance about not
admitting cash payment by Mr. Gopal Kondawar in first two statements.
The Appellant - Assessee has insisted on supply of the statement dated 7 th
June 2013. These statements have been made the foundation by the
Income Tax authorities in passing the orders thereby including Rs.
1,50,00,000/- in the income of the Asessee. These materials cannot be
used against the Assessee without giving them an opportunity to challenge
the contents of those statements. That is why an opportunity of cross-
examining Mr. Gopal Kondawar needs to be given.
REMAND
13. Assistant Commissioner of Income Tax is the first authority
who has conducted that enquiry. Hence, he only can be directed to secure
the presence of Mr. Gopal Kondawar for cross-examination by the
Assessee. We do not find anywhere any observations by the learned
Commissioner of Income Tax and by the learned Appellate Tribunal
regarding the grievance made about denial of an opportunity of cross-
examination. Failure to give an opinion about this grievance also amounts
to refusal of an opportunity to cross-examine the said Gopal Kondwar
which is improper. Hence, all the orders needs to be set-aside. For the
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8/8 ITL.30.2018.(Judg)
above discussion we answer both the issues in the affirmative and proceed
to pass the following order.
ORDER
(A) The Appeal is partly allowed.
(B) The orders dated 29th June 2017, 30th November 2016 and 27th
March 2015 are hereby set-aside.
(C) The matter is remanded back to the Assistant Commissioner of
Income Tax, Central Circle 2(1), Nagpur. The Petitioner to appear before him on 29th July 2019.
(D) The Assistant Commissioner of Income Tax is directed to secure the presence of Mr. Gopal Kondawar being the Director of M/s Jagdamba Realtors Private Limited for his cross-examination on behalf of the Appellant - Assessee.
(E) The Appellant - Assessee is at liberty to file new documents, if any, connected to the issues involved and to file additional explanation. (F) The Assistant Commissioner of Income Tax is directed to pass appropriate order as per merits of the case.
(G) Parties to bear their own costs.
JUDGE JUDGE
Yadav VG
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