Cross-examination requirement defeats bogus capital gain addition when third-party statements lack independent corroboration.

Third-party statements and investigation wing information are insufficient to sustain a bogus long-term capital gain addition where the assessee's sale transactions are supported by demat and bank records and no independent corroborative material is produced. Reliance on such material without giving the assessee an opportunity to cross-examine the witness was held inadequate, and the addition was deleted.

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Issues: Whether the addition of the alleged bogus long-term capital gain could be sustained on the basis of the third-party statement without affording cross-examination.

Analysis: The addition rested on the statement of Shri Mukesh Chokshi and the information received from the investigation wing. The sale transactions were reflected through demat and bank records, and no independent cogent material was brought to support the allegation of bogus accommodation entries. Since no opportunity of cross-examination was given to the assessee, reliance solely on the third-party statement was held insufficient to sustain the addition.

Conclusion: The addition of Rs. 1,83,768 was deleted and the issue was decided in favour of the assessee and against the revenue.

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