Cross-examination and natural justice govern reassessment based on third-party statements, with the matter sent back for fresh adjudication.

Where an assessment disallowing exemption under section 10(38) was based on third-party statements, denial of access to those statements and refusal of cross-examination offended natural justice. The Tribunal followed its coordinate-bench view and restored the matter to the Assessing Officer for fresh adjudication after supplying the material and granting cross-examination and other due opportunity in accordance with law. The levy of interest under sections 234A, 234B, 234C and 234D was treated as consequential and left to follow the fresh outcome.

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Issues: Whether the assessment disallowing exemption under section 10(38) and the consequential reassessment required to be set aside and restored for fresh adjudication after providing cross-examination of the concerned persons.

Analysis: The assessment was founded on third-party material, and the assessee's grievance was that the statements used against it were not furnished and no opportunity of cross-examination was granted. The Tribunal followed its earlier coordinate-bench view and restored the matter to the Assessing Officer for fresh decision after granting cross-examination and due opportunity in accordance with law. The levy of interest under sections 234A, 234B, 234C and 234D was treated as consequential.

Conclusion: The matter was remitted to the Assessing Officer for fresh adjudication after providing cross-examination and other due opportunity; the assessee succeeded to that extent.

Final Conclusion: The appeal was not finally decided on the merits of the exemption claim, and the assessment was sent back for reconsideration with procedural safeguards, leaving consequential interest to follow the fresh outcome.

Ratio Decidendi: Where an assessment rests on third-party statements, denial of cross-examination and related material violates natural justice and warrants restoration of the matter for fresh decision.

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