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TRN Impex Pvt. Ltd., New Delhi vs. The Income Tax Officer, New Delhi - (Income Tax Appellate Tribunal) (17 Feb 2021)

Statement recorded at the back of assessee cannot be used in evidence against the assessee, unless the right of cross-examination have been granted


Direct Taxation

Present appeal by Assessee has been directed against the Order of the Learned Commissioner of Income Tax (Appeal) [CIT(A)], New Delhi, for the Assessment Year (AY) 2011-2012, challenging the reopening of the assessment under Section 147/148 of the Income Tax Act, 1961 (IT Act, 1961) and addition of Rs.10 lakhs under Section 68 of the IT Act, 1961.

The assessee submitted that, no independent enquiry have been conducted on documentary evidences by the Assessing Officer (AO) and even the Investor has not been summoned for recording their statement. The AO did not provide any opportunity to cross-examine to the statements of Deepak Agarwal and Mukesh Kumar which is the basis for making addition against the assessee, despite specific request is made by assessee. Therefore, such statements cannot be read in evidence against the assessee.

The assessee made a specific request before AO to provide an opportunity to cross- examine the statements of Shri Deepak Agarwal and Shri Mukesh Kumar, but, it were denied by the AO vide his letter. The AO in his letter has mentioned that, primary onus is upon assessee to prove its case and under such circumstances by asking for cross- examination, the assessee is trying to shift the burden of proof on the Department. Therefore, request of assessee was declined. The Learned CIT(A) instead of deciding the issue in proper perspective as per Law has also held that, right of cross-examination to the statements of witnesses used against the assessee is not an absolute in nature. However, it is well settled Law that, any material collected at the back of assessee or statement recorded at the back of assessee cannot be used in evidence against the assessee, unless the same is confronted to the assessee at assessment proceedings and right of cross-examination have been granted to assessee to such statements.

It is clear that, right of assessee have been denied by the authorities below in not allowing the assessee to cross-examine the statements of Shri Deepak Agarwal and Shri Mukesh Kumar. Thus, these statements recorded at the back of the assessee which were adverse in nature to the interest of assessee cannot be relied upon against the assessee and no addition could be made on that basis. Thus, there is no material left on record with the Department to justify the addition of Rs.10 lakhs against the assessee. Documentary evidences on record have not been rebutted by the AO through any evidence or material on record. No independent enquiry has been made against these documentary evidences. Therefore, such documentary evidences clearly support the explanation of assessee that genuine investment has been made in the assessee company.

In facts and circumstances of the case, there is no adverse material available on record against the assessee so as to make the impugned addition of Rs.10 lakhs and that no investigation have been made by the AO on the documentary evidences submitted by assessee, present Tribunal is of view that, addition of Rs.10 lakhs is wholly unjustified. The Orders of the authorities below are set aside and the addition of Rs.10 lakhs is deleted. Appeal of the Assessee allowed.


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