Case Law Details
Bhatia Diamonds Pvt. Ltd. Vs ITO (ITAT Delhi)
Conclusion: Addition under section 69C on the basis of statement of third party without granting opportunity of cross-examination to assessee was not valid as it amounted to ivolation of principle of natural justice and against the law.
Held: During the course of search and seizure action, statement of Sh. R Jain and Sh. S Jain were recorded on oath wherein they admitted that the concerned controlled and managed by them were not doing any real trading in diamonds but indulged in paper transactions only. Shri R Jain also submitted that there were some independent parties in the market which were in requirement of unsecured loans against unaccounted cash which was also provided by their concerns. The issue involved in this case was that assessee-company had made bogus purchases from the following concerns managed and controlled by R Jain Group. AO noted that as the main person Sh. R Jain involved in this whole episode was not able to attend and substantiate his claim by way of evidence and submission before his AO, then it was not possible that assessee had made claims of the genuineness of the sale/purchases. Therefore, AO made the additions in the hands of assessee-company as the creditworthiness and genuineness of these transactions had not been proved by assessee. It was held assessee had considerable cogency that addition was made on the basis of statement of Sh. R Jain, but assessee was not granted the opportunity to cross examine Sh. R Jain which ground was also raised before CIT(A), who did not adjudicate the same, which was against the settled law. Since the impugned addition was made on the basis of statement without providing any opportunity to assessee to cross examine the same, was in violation of principle of natural justice and against the law. Thus, addition made by AO under section 69C was deleted.
FULL TEXT OF THE ITAT JUDGEMENT
The assessee has filed the appeal against the order dated 19.1.2018 passed by Ld. CIT(A)-33, New Delhi relevant to assessment year 2011-12 by raising as many as 07 grounds, but at the time of hearing, Ld. counsel for the assessee has only argued the ground no. 5 which is reproduced as under:-
Please become a Premium member. If you are already a Premium member, login here to access the full content.
