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Issues: Whether the addition made towards alleged accommodation entry from Falguni Enterprises was sustainable.
Analysis: The assessee denied any purchase or sale transaction with Falguni Enterprises during the year and explained the receipts as recovery of outstanding dues from an earlier year. The ledger account and other material relied upon by the assessee were not effectively controverted by the Revenue. The addition rested substantially on investigation information and a third-party statement, but the Revenue did not factually establish that the assessee had in fact received accommodation entry of the amount added. The assessee was also not supplied the third-party statement and was denied cross-examination, which offended the principles of natural justice. In the absence of contemporaneous corroborative evidence, the addition could not be sustained on assumptions or presumptions.
Conclusion: The addition for alleged accommodation entry was deleted and the issue was decided in favour of the assessee.
Ratio Decidendi: An addition based on alleged accommodation entries cannot be sustained unless the Revenue factually proves the transaction with credible corroboration and affords fair opportunity, including cross-examination where a third-party statement is relied upon.
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