Assessee wins appeal as addition deleted due to denial of cross-examination opportunity violating natural justice

ITAT Jaipur allowed the assessee's appeal regarding unaccounted money on flat sales. The tribunal held that assessment order validity was not affected by missing DIN in the body since DIN was separately generated and communicated to assessee, following SC stay in Brandix case. However, the addition of unaccounted money was deleted as AO relied on seized documents and statements without providing cross-examination opportunity of key witness, violating natural justice principles. The tribunal directed AO to delete the entire addition.

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Issues Involved:
1. Validity of the assessment order under section 153C of the IT Act.
2. Addition of Rs. 3,96,05,000/- to the total income of the assessee on the ground of receiving unaccounted money from the sale of flats.

Issue-Wise Detailed Analysis:

1. Validity of the Assessment Order:

Arguments by Assessee:
- The assessment order dated 27.12.2019 was issued without a Document Identification Number (DIN), violating CBDT Circular No. 19/2019.
- The AO obtained a common approval from the Additional Commissioner of Income Tax under section 153D for various assessment years, which should have been taken separately.
- The satisfaction note recorded by the AO for initiating proceedings under section 153C was improper and based on generalization.
- The assessee was not provided a proper opportunity for cross-examination of Shri Upendra Kumar Soni, violating principles of natural justice.

Arguments by Revenue:
- The DIN was generated and communicated to the assessee via email on 28.12.2019.
- The approval by the Additional Commissioner was given after due application of mind and was mentioned in the assessment order.
- The satisfaction note was properly recorded, and the addition was based on documents found during the search at Shri Upendra Kumar Soni's premises.

Tribunal's Findings:
- The assessment order does not contain the DIN, but it was duly generated and communicated to the assessee, making the assessment valid.
- The approval under section 153D was properly obtained and mentioned in the assessment order.
- The satisfaction note was found to be reasonable, and the nexus of the documents with the appellant was established.
- The issue of cross-examination and other arguments related to addition were addressed under the second ground of appeal.

2. Addition of Rs. 3,96,05,000/-:

Arguments by Assessee:
- Relied on the decision of ITAT Jaipur Bench in M/s Moti Developers, arguing that similar facts and issues were involved.
- Contended that the document found from Shri Upendra Kumar Soni's possession did not establish any nexus with the appellant.
- Pointed out discrepancies in the excel sheets used by the AO for making the addition.
- Argued that the statement of Shri Upendra Kumar Soni did not mention any cash passed to the appellant.
- Asserted that the addition was made without corroborative evidence and was based on surmises and conjectures.
- Highlighted that the GST department had rejected the demand of short payment of GST on the alleged cash receipts.

Arguments by Revenue:
- The addition was based on documents found and seized during the search at Shri Upendra Kumar Soni's premises, which clearly established that on-money in cash was taken against sales of flats.

Tribunal's Findings:
- The document found from Shri Upendra Kumar Soni's possession did not mention the name of the assessee, the date or year of receipt, or unit-wise bifurcation of amounts.
- The excel sheets used by the AO contained serious discrepancies and inconsistencies, making them unreliable.
- The AO did not provide complete statements of Shri Upendra Kumar Soni to the assessee, and no effective efforts were made to enforce his attendance for cross-examination.
- The satisfaction note prepared by the AO was not reasonable and lacked corroborative material.
- The Tribunal cited the decision of ITAT Jaipur Bench in M/s Moti Developers and other relevant case laws, concluding that the addition was not sustainable.

Conclusion:
The Tribunal set aside the order passed by CIT(A) and directed the AO to delete the entire addition of Rs. 3,96,05,000/-. The appeal of the assessee was partly allowed.

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