Denial of Opportunity of Cross-examination of Parties allegedly received ‘on-money’ from Sale of Land amounts to Violation of Natural Justice Principles: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Indore bench has held that the denial of opportunity to the assessee to conduct cross-examination of the parties who have stated to have received ‘on money from the sale of land would amount to a violation of natural justice principles.

The Tribunal bench comprising Judicial Member C M Garg and Accountant Member Manish Board, while quashing an order passed by the department, directed to delete the addition.

The assessee, an individual, challenged the addition made by the Assessing Officer alleging that the same was passed solely based on the seized material found from the Garha Group & Apollo Group. It was also alleged that the Assessee has sought an opportunity for cross-examination of the searched person, during the proceedings before the Ld. CIT(A) and the same was ignored.

While considering the second appeal filed by the assessee, the Tribunal noted that the registered documents for the purchase of a plot of land show that the consideration is not less than the guidelines rate and both buyer and seller have agreed to this consideration.

The Tribunal further relied on the decision of the Supreme Court in the case of M/s Andaman timber Industries vs. CCE wherein it was held that “if the assessee is not provided any opportunity to cross-examine the person who started to have received ‘on money is a violation of principles of natural justice. We thus called for the deletion of addition so made by the Ld. Assessing Officer”.

While concluding the appeal in favor of the assessee, the Tribunal held that “we, therefore, under the given facts and circumstances of the case, respectfully following the decisions referred hereinabove, are of the considered view in the instant case also assessee has not been provided any opportunity of cross-examination of the parties who have stated to have received ‘on money’ from the sale of land. We, thus, set aside the finding of Ld. CIT(A) and delete the addition of Rs.36,46,175/- and allow ground no.4 raised by the assessee. Ground No.5 & 6 raised by the assessee becomes merely academic in nature as we have already deleted the addition allowing ground no.4 of the assessee.”

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.