2020 (3) TMI 1470 - AT - Income Tax

Addition of money payment for purchase of plot - undisclosed investment of on-money paid - not allowing assessee to cross examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order - HELD THAT - Addition made by AO merely on the basis of statement, when there is no corroborative material with AO suggesting the alleged addition, without allowing assessee an opportunity to cross examine the person on whose statement addition was made. Accordingly, AO is directed to delete the addition so made. See ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT . Appeal of the assessee is allowed.

Summary

Issues:
Appeal against addition of on-money payment for purchase of plot.

Analysis:
The appeal was filed by the assessee against the addition of Rs. 5,83,320 made by the Assessing Officer (AO) on account of on-money payment for the purchase of a plot. The AO received information that the assessee, a salaried employee, had purchased a plot in a residential project developed by Shri Madan Mohan Gupta. The AO alleged that the assessee had paid on-money for the purchase, leading to the addition. The assessee denied making any extra payment towards the plot purchase. The CIT(A) upheld the AO's action, prompting the appeal before the Tribunal.

The assessee relied on a decision of the Coordinate Bench in a similar case where the addition made on account of alleged on-money payment for a plot purchase was deleted. The Tribunal in that case observed that not providing an opportunity for cross-examination amounted to a violation of natural justice, rendering the order null and void. The Tribunal emphasized the importance of corroborative evidence and the right to cross-examine witnesses. Citing relevant legal precedents, the Tribunal in the previous case directed the AO to delete the addition based solely on a statement without corroborative material or cross-examination.

Considering the consistent view taken by various Benches of the Tribunal in favor of the assessee on similar issues, the Tribunal in the current case found no merit in the addition made by the AO. The Tribunal directed the AO to delete the addition, as no adverse order or legal precedent against the assessee was presented. The appeal of the assessee was allowed, and the order was pronounced in favor of the assessee on 19th March 2020.