Disallowance based on third party information about unexplained ...

Unverified third-party info can't justify disallowance. Assessee's documents substantiated purchases. Opportunity for cross-examination a must.

Case Laws     Income Tax

July 25, 2024

Disallowance based on third party information about unexplained purchases was challenged. ITAT held that the additions were unsustainable as the disallowance was solely based on unverified third-party information gathered by the Department's Investigation Wing, without providing an opportunity for cross-examination to the assessee, who had prima facie substantiated the purchases through documentation like bills, confirmed accounts, and VAT registration of sellers. The purchases were found acceptable, and the consequent addition to income was directed to be deleted, favoring the assessee.

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