Assessee gets relief when addition made on third-party statements without cross-examination opportunity violates natural justice

HC upheld ITAT's decision allowing relief to assessee where addition was made based on third-party statements recorded without providing cross-examination opportunity. Assessing Officer made addition for suppressed sales relying solely on statements without conclusive evidence, violating natural justice principles. Commissioner noted lack of supporting record or evidence. HC found no question of law arose as ITAT correctly interfered with lower authorities' orders, following precedent where cross-examination denial constituted natural justice violation.

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Issues involved:
The judgment involves the assessment of five appeals under Section 260A of the Income Tax Act, 1961, regarding the Assessment Years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018.

Issue 1: Addition of Rs. 14,70,900/- based on suppressed sales
The Tribunal allowed the appeals due to the Assessing Officer not providing an opportunity for cross-examination to the assessee regarding relied-upon statements, violating principles of natural justice. The judgment of the Apex Court and other High Courts was cited in support of the decision.

Issue 2: Opportunity of cross-examination denied
The Tribunal observed that the Assessing Officer did not provide proper opportunity for cross-examination to the assessee, which was a violation of principles highlighted in the judgment of the Hon'ble Calcutta High Court. The Tribunal found that the impugned additions were made without giving the assessee a chance to rebut through cross-examination.

Issue 3: Impugned order based on third-party evidence
For the subsequent years, additions were made based on an e-mail communication received from electronic records, without independent inquiry or corroborative evidence. The Tribunal noted contradictions in the evidence presented and found that the Assessing Officer relied solely on third-party evidence without proper investigation.

Judgment Summary:
The High Court dismissed the appeals, stating that no substantial question of law was established. The background of the case revealed information received from the Directorate General of GST Intelligence regarding alleged suppression of turnover. The Tribunal found that the Assessing Officer did not provide adequate opportunity for cross-examination, leading to a violation of natural justice principles.

The Tribunal considered the statements of various individuals and found that the impugned additions were made without proper opportunity for the assessee to rebut the evidence. The Tribunal highlighted discrepancies in the evidence presented and concluded that the appeals should be allowed based on the lack of proper cross-examination.

The judgment referenced the Apex Court's decision in a similar case under the Central Excise Act, emphasizing the importance of allowing cross-examination to maintain fairness and uphold natural justice principles. The Division Bench of the Delhi High Court also upheld a similar view, emphasizing the necessity of providing the assessee with an opportunity for cross-examination.

In conclusion, the High Court affirmed the Tribunal's decision to allow the appeals, as the impugned orders were found to lack substantial evidence and violated principles of natural justice. The judgment highlighted the importance of fair procedures and adequate opportunities for rebuttal in such cases.

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