Witness cross-examination cannot be replaced by written replies; non-compliance with remand directions invalidates an unexplained-investment addition.

Cross-examination of a witness whose statement forms the basis of an unexplained-investment addition is required where the Tribunal specifically directs it on remand. Issuing summons, receiving written replies, and allowing the assessee to comment on those replies does not substitute for cross-examination. Failure to comply strictly with the remand direction denied natural justice and made the consequential assessment and addition unsustainable. The article notes that the addition was directed to be deleted.

---

---

Issues: Whether an addition for unexplained investment could be sustained where the Assessing Officer did not facilitate cross-examination of the witness despite a specific remand direction of the Tribunal.

Analysis: The earlier remand required the Assessing Officer to facilitate cross-examination of the witness whose assertions formed the foundation of the addition. Issuing summons, obtaining written replies from the witness, and supplying those replies to the assessee did not constitute cross-examination. The Assessing Officer was bound to comply strictly with the Tribunal's direction and could not substitute it with an opportunity to furnish comments on the witness's statement. Denial of cross-examination of a witness whose statement was relied upon violated principles of natural justice and rendered the consequential assessment unsustainable.

Conclusion: The assessment and the addition of Rs. 38,15,000 as unexplained investment were unsustainable; the addition was directed to be deleted in favour of the assessee.

---