The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the Addition cannot be made on evidence of third party without granting the cross-examination to the assessee.
The assessee, Vijayshree Food Products P. Ltd. is a company engaged in the business of manufacturing and export of tobacco products. It filed its return of income on 30th September, 2014 declaring the loss of Rs.18,78,467/-. The return was processed u/s 143(1) of the Act on 26th November, 2014 at the returned income.
The issue raised was that on the facts and in the circumstances of the case CIT (A) New Delhi has erred both on facts and in law, in sustaining the action of AO violating the principle of natural justice by not providing opportunity for cross-examination of persons, whose statements have been relied upon by the AO, in spite of specific request made by the appellant in assessment proceedings as well as before CIT(A).
The assessee submitted that third party statements cannot be relied upon for assuming jurisdiction. He submitted that during assessment proceedings the AO has relied on the statement of Mr. Vikash & Devesh without providing opportunity to cross examine them.
The coram of Judicial Member, Suchitra Kamble and Accountant Member, R.K.Panda held that when except the statement of the 3rd party is the only evidence available with the revenue authorities, addition cannot be made on that solitary evidence without granting the cross-examination of such 3rd party to the assessee when asked for. In the present case the assessee asked for cross-examination before the assessing officer and as well as before the CIT(A), the assessee did not give the cross-examination of those accommodation entry providers. Further, the copies of the statement given by the assessing officer during the course of remand proceedings, none of the statement of the entry provider implicated the company, which deposited the share capital with the assessee.
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