The case number ITA 698/DEL/2019 involves the appellant, Ravi Sharma, Delhi, and the respondent, ITO Ward 2(2), Faridabad. This case pertains to the assessment year 2015-16 and was filed on January 31, 2019. The order type is a Final Tribunal Order, with the date of the order and the date it was pronounced being August 14, 2019.
The appeal was brought before the Income Tax Appellate Tribunal (ITAT), Delhi Bench: ‘SMC’, New Delhi, with a panel comprising Sh. H.S. Sidhu, Judicial Member. This tribunal session also covered another appeal with similar issues filed by Rameshwar Dayal Sharma, who faced similar grounds for the same assessment year.
Ravi Sharma sought to set aside the impugned order dated November 30, 2018, passed by the CIT (Appeals), Faridabad. The primary grounds of appeal included:
The primary issue in this case revolved around the denial of the opportunity to cross-examine the witnesses whose statements were used by the revenue authorities to make the addition. Ravi Sharma’s counsel argued that this denial violated the principles of natural justice, citing the Hon’ble Supreme Court of India’s decision in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II (281 CTR 241), where a similar issue was decided in favor of the assessee.
In the Andaman Timber Industries case, the Supreme Court held that not allowing the assessee to cross-examine the witnesses, whose statements were the basis of the impugned order, was a serious flaw and amounted to a violation of natural justice. This case established that when the assessee disputes the truthfulness of witness statements, the opportunity for cross-examination must be provided.
The tribunal noted that the AO and CIT(A) had indeed denied Ravi Sharma the opportunity to cross-examine the witnesses, despite his repeated requests. This denial was contrary to the law as laid down by the Supreme Court in the Andaman Timber Industries case. The tribunal also referenced the decision of the Hon’ble Delhi High Court in Udit Kalra vs. ITO (2019-TIOL-751-HC-DEL-IT), which was not applicable in this case due to the specific context of witness cross-examination and natural justice principles.
The tribunal, respecting the Supreme Court’s decision, found the denial of cross-examination and non-supply of documents to be a violation of natural justice. Consequently, the tribunal ordered the deletion of the addition of Rs. 18,84,470 and allowed the appeal in favor of Ravi Sharma.
This case highlights the importance of upholding natural justice principles in assessment and appellate proceedings. The tribunal’s decision underscores the necessity for revenue authorities to provide adequate opportunities for cross-examination and to supply relevant documents when requested by the assessee. The detailed examination of the grounds of appeal and the tribunal’s comprehensive analysis serve as a crucial reference for similar cases in the future, emphasizing the need for fairness and transparency in tax proceedings.
The outcome of this case reiterates that any denial of natural justice can render the assessment order null and void. This decision will likely influence future cases where the principles of natural justice are in question, ensuring that all parties involved in tax disputes are treated fairly and justly.
The tribunal’s adherence to the Supreme Court’s ruling in the Andaman Timber Industries case ensures that the legal standards for natural justice are consistently applied, reinforcing the judiciary’s role in protecting taxpayer rights.
Ravi Sharma vs ITO Ward 2(2), Faridabad: Appeal on Violation of Natural Justice in AY 2015-16
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