The ITAT Bangalore, in Amit Mehta (HUF) v. ITO, directed the IT Department to allow Cross-Examination of witness in cases where the assessment was passed solely on the basis of the statement/evidence.
In the instant case, the Department conducted search on the premises of the assessee, an HUF, on the basis of statement of one Mr. Mukesh Choski. Later, the entire share transactions entered upon by the assessee was treated as bogus and made the same taxable in the hands of the assessee. Assessee challenged the order on ground that no cross-examination was allowed to them while completing assessment and therefore, the order is liable to be quashed since the requirements of natural justice had not been complied with.
Diing deeply into the facts of the case, the bench found that during the course of search conducted upon the Shri Mukesh Choksi group, statement of Shri Mukesh Choksi was recorded and in his statement he has admitted that he was providing accommodation entries to those who were interested to earn capital gain. “On a careful perusal of the assessment order, I find that there is no finding with regard to the supply of statement of Shri Mukesh Choksi to the assessee. Moreover, nothing is available on record, wherefrom it could be inferred that assessee was ever allowed to cross-examine Mr. Mukesh Choksi. It is settled position of law that statement or the evidence which is being relied upon by the AO for making the addition in the hands of assessee, the same should be confronted to the assessee and the assessee should be allowed to cross-examine the witness in this regard.”
Allowing he appeal, the bench noted that “from a careful perusal of the orders of lower authorities, it is quite evident that statement of Mr. Mukesh Choksi was relied on for making the addition, but assessee was never allowed to cross-examine him. In these circumstances, I am of the view that the AO was not justified in making addition in the hands of assessee, without allowing the assessee to cross examine Mr. Mukesh Choksi, whose statement was relied upon for making the above additions.”
Read the full text of the Order below.
