Appeal allowed due to lack of cross-examination, diary contents insufficient, natural justice principles violated.

The Tribunal allowed the appeal, holding that the addition of Rs. 64 crores as unaccounted income was unjustified due to the lack of opportunity for cross-examination of the third party whose statement formed the sole basis for the addition. The Tribunal found the diary contents insufficient to support the addition, emphasizing the violation of natural justice principles. Consequently, the addition was deleted, and the appellant's appeal was successful.

---

---

Issues Involved:
1. Addition of Rs. 64 crores as unaccounted income.
2. Reliance on the statement of a third party and contents of a diary.
3. Violation of principles of natural justice.
4. Double taxation of Rs. 9 crores.
5. Charging interest under sections 234B and 234D of the Income-tax Act.

Detailed Analysis:

1. Addition of Rs. 64 crores as unaccounted income:
The CIT(A) upheld the addition of Rs. 64 crores made by the Assessing Officer, alleging it was received by the appellant as on-money in cash, not accounted for in the regular books, against the sale/booking of flats in the Emerald Garden Project. The Assessing Officer based this addition on a diary found during a survey at the premises of a property broker, Mr. Anoop Asthana, which purportedly contained details related to the Emerald Garden Project.

2. Reliance on the statement of a third party and contents of a diary:
The CIT(A) and the Assessing Officer relied heavily on the statement of Mr. Anoop Asthana and the contents of the diary impounded from his premises. The diary allegedly contained entries of white and black money transactions related to the Emerald Garden Project. The appellant argued that the diary's contents were unreliable and unauthentic, and no incriminating material was found during the simultaneous survey at the appellant's premises. The appellant also contended that the diary was found at a third party's premises and not from the appellant, making it an unreliable basis for such a significant addition.

3. Violation of principles of natural justice:
The appellant argued that the addition was made on the basis of ex-parte material, violating the principles of natural justice. The appellant was not provided with a copy of Mr. Anoop Asthana's statement nor given an opportunity to cross-examine him. The Tribunal emphasized that merely confronting the statement recorded at the back of the assessee, without providing an opportunity for cross-examination, violates the natural justice principle of audi alterem partem. This view is supported by various judicial precedents, including Kishinchand Chellaram vs. CIT and Andaman Timber Industries vs. CCE.

4. Double taxation of Rs. 9 crores:
The CIT(A) held that the surrender of Rs. 9 crores by the Managing Director of the appellant, Shri Sanjeev Kumar Jhunjhunwala, was unsubstantiated and based on flimsy grounds, allegedly confirming the modus operandi used by the appellant company. The appellant contended that this amount was already assessed as income in the hands of the Managing Director, leading to double taxation.

5. Charging interest under sections 234B and 234D of the Income-tax Act:
The appellant contested the charging and computation of interest under sections 234B and 234D of the Income-tax Act. However, the Tribunal's decision primarily focused on the addition of Rs. 64 crores and the principles of natural justice.

Conclusion:
The Tribunal held that the case of the assessee was prejudiced for want of providing an opportunity to cross-examine Mr. Anoop Asthana, whose unilateral statement was the sole basis for the addition. The Tribunal also found that the three pages of the diary did not establish any case for addition in the hands of the assessee for the year under consideration. Consequently, the addition made was deleted, and the appeal was allowed.

---