Third Party Statement alone not Incriminating Material for justifying Addition made in Assessment framed u/s 153A: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Jaipur bench consisting of Sandeep Gosain, Judicial Member, and Dr. Meetha Lal Meena Accountant Member held that third party statement alone, not incriminating material for justifying addition made in assessment framed u/s 153A.

The assessee, Jai Singh Yadav filed his original return of income u/s 139(1)declaring a total income of Rs.3,08,160/. The assessee is engaged in the business of digging, tilling, and leveling of agriculture farms and commission on the sale of agriculture produce of other farmers. In the case of the assessee, a search and seizure operation u/s 132 was carried out by Income Tax Department on 19/11/2016 at the premises. By virtue of search, a warrant was issued in the joint name of assessee Jai Singh Yadav and his brother Gopal Lal Yadav. In the course of the search, various documents were found and seized by the department.

On the same date, a search and seizure were conducted in a nearby locality. Consequent to the search proceedings, the Assessing Officer (AO) issued the notice u/s 153A, and in response thereto, the assessee filed his return of income declaring the total income at Rs.3,08,160/-, same as declared u/s 139(1). The statements from the third parties regarding certain transactions were noted and considered by the AO. The assessee replied that the third party had retracted the statement through the affidavit and also asked the AO to provide a cross-examination. However, the AO has not accepted the request of the assessee and stated that the request of the assessee for cross-examination is not acceptable as the right of cross-examination is not an absolute right.

The ITAT held that “When the assessee sought cross-examination of Sh. Harpal Yadav the AO has straight away denied the same. When it is now a settled principle of law that no addition can be made only on the basis of statements of the third party without providing the opportunity of cross-examination of the person when specifically asked by the assessee in whose hand the addition has been made.”

To Read the full text of the Order CLICK HERE

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