Natural justice requires cross-examination before salary additions based on disputed Form 16 and bank record discrepancies can stand.

Additions based on discrepancies between the assessee's Form 16, the employer's Form 16, and bank salary credits could not be sustained without proper verification of the employer's records. Where adverse reliance was placed on the employer's response under section 133(6), the assessee had to be given a fair opportunity to rebut that material and cross-examine the adverse witness. The records were therefore required to be re-examined by the Assessing Officer after granting proper hearing, and the additions were not finally upheld at that stage.

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Issues: Whether the additions arising from the discrepancy between the assessee's Form 16, the employer's Form 16, and the salary reflected in bank records could be sustained without proper verification and an opportunity of cross-examination.

Analysis: The additions were founded on a mismatch between the two Form 16s and the salary figures furnished by the employer. The Tribunal found that the Assessing Officer had not adequately verified the correct facts from the employer, had not reconciled the salary and TDS records with the bank credits, and had not afforded the assessee a proper opportunity to rebut the employer's version. Since the employer's response under section 133(6) of the Income-tax Act, 1961 was relied upon adversely, the assessee was entitled to a fair hearing and an opportunity to cross-examine. The Tribunal held that the principles of natural justice, including audi alteram partem, required further examination of the records.

Conclusion: The matter was required to be reconsidered by the Assessing Officer after granting proper opportunity of hearing and cross-examination, and the additions were not finally sustained at this stage.

Ratio Decidendi: An addition based on disputed third-party material cannot be sustained without affording the assessee a fair opportunity to rebut the material and cross-examine the adverse witness when the facts are not properly verified.

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