Assessee wins appeal as addition based on uncorroborated witness statements deleted without cross-examination opportunity

The ITAT Jodhpur allowed the assessee's appeal against an addition made for undisclosed investment in plot purchase. The AO had made the addition solely based on witness statements without corroborative evidence and denied the assessee's right to cross-examine the witnesses whose statements formed the basis of the order. The tribunal held that additions cannot be sustained merely on uncorroborated statements when the assessee is denied cross-examination opportunity. The AO was directed to delete the addition.

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Issues:
Appeal against addition of on-money payment for purchase of plot.

Analysis:
The appeal was filed by the assessee against the addition of Rs. 5,83,320 made by the Assessing Officer (AO) on account of on-money payment for the purchase of a plot. The AO received information that the assessee, a salaried employee, had purchased a plot in a residential project developed by Shri Madan Mohan Gupta. The AO alleged that the assessee had paid on-money for the purchase, leading to the addition. The assessee denied making any extra payment towards the plot purchase. The CIT(A) upheld the AO's action, prompting the appeal before the Tribunal.

The assessee relied on a decision of the Coordinate Bench in a similar case where the addition made on account of alleged on-money payment for a plot purchase was deleted. The Tribunal in that case observed that not providing an opportunity for cross-examination amounted to a violation of natural justice, rendering the order null and void. The Tribunal emphasized the importance of corroborative evidence and the right to cross-examine witnesses. Citing relevant legal precedents, the Tribunal in the previous case directed the AO to delete the addition based solely on a statement without corroborative material or cross-examination.

Considering the consistent view taken by various Benches of the Tribunal in favor of the assessee on similar issues, the Tribunal in the current case found no merit in the addition made by the AO. The Tribunal directed the AO to delete the addition, as no adverse order or legal precedent against the assessee was presented. The appeal of the assessee was allowed, and the order was pronounced in favor of the assessee on 19th March 2020.

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