Voluntary deposit immunity and cross-examination rights defeated additions based on credits and third-party commission evidence.

Reassessment under section 148 was accepted for credits of Rs. 1,00,000 and Rs. 3,08,000 because the original processing had not examined whether the remittances were genuine and the Tribunal treated escapement as a proper basis for reopening. The additions, however, were deleted: the first two credits were found covered by the Voluntary Deposits (Immunities & Exemptions) scheme, so the Revenue could not insist on proving their source, and the addition of Rs. 1,42,800 based on a third party's statement failed because no cross-examination was allowed and the statement did not specifically implicate the assessee. The Tribunal thus gave the assessee relief on the merits.

---

---

Issues: (i) Whether reassessment under section 148 was valid in respect of the credits of Rs. 1,00,000 and Rs. 3,08,000. (ii) Whether the additions of Rs. 1,00,000, Rs. 3,08,000 and Rs. 1,42,800 were sustainable, including the applicability of the Voluntary Deposits (Immunities & Exemptions) scheme.

Issue (i): Whether reassessment under section 148 was valid in respect of the credits of Rs. 1,00,000 and Rs. 3,08,000.

Analysis: The reassessment was founded on the premise that the credits represented bogus remittances and had escaped assessment. The Tribunal treated the question whether the remittances were genuine as a matter requiring enquiry and noted that the original processing under section 143(1)(a) had not examined that issue. On the material before it, the Tribunal accepted the Revenue's basis for reopening in relation to those credits.

Conclusion: Reassessment in respect of Rs. 1,00,000 and Rs. 3,08,000 was held valid, against the assessee.

Issue (ii): Whether the additions of Rs. 1,00,000, Rs. 3,08,000 and Rs. 1,42,800 were sustainable, including the applicability of the Voluntary Deposits (Immunities & Exemptions) scheme.

Analysis: For the first two credits, the Tribunal accepted that the assessee had brought the amounts within the protective umbrella of the Voluntary Deposits (Immunities & Exemptions) scheme and had complied with the conditions for deposit and withdrawal, so the Department could not insist on the source of the deposit. As to Rs. 1,42,800, the addition was based on a third party's statement regarding commission. The Tribunal found that the assessee had not been given an opportunity to cross-examine that person and that the statement did not specifically attribute the commission to the assessee. The reliance placed on that statement was therefore held to offend natural justice.

Conclusion: The additions of Rs. 1,00,000, Rs. 3,08,000 and Rs. 1,42,800 were deleted, in favour of the assessee.

Final Conclusion: The reassessment survived only to the limited extent of validity, but the impugned additions were not sustained and the assessee obtained complete relief in the appeal.

Ratio Decidendi: Where a credit is covered by the statutory immunity attached to a voluntary deposit scheme, the Revenue cannot insist on disclosure of source contrary to that scheme; and an addition based on third-party material cannot be sustained without affording cross-examination when the statement is relied upon as the basis of the adverse finding.

---