No addition against wife merely based on statement of husband

Sunita Gadde Vs ITO (ITAT Delhi)

Conclusion: Any material collected at the back of assessee or any statement recorded under section 131 at the back of assessee could not be read in evidence against assessee, unless same was confronted to assessee and that assessee should be allowed to cross-examine to such statements. In this case, the AO had failed to produce Smt. Jaya Sharma before assessee for cross-examination on behalf of assessee particularly when Smt. Jaya Sharma had retracted from her statement and the statement of husband of assessee was not relevant to the matter in issue and as such they could not be the basis for making any addition against assessee in assessment year under appeal.

Held: Revenue had made an addition of Rs.1.05 crores against assessee solely relying upon statement of Smt. Jaya Sharma-Seller recorded under section 131 in which she had admitted to have received cash from assessee and her husband on account of sale of property. Later on Smt. Jaya Sharma denied from such statement recorded under section 131. Assessee had made several requests before AO in writing at different stages that all the material collected at the back of assessee might be provided to assessee and that statement of Smt. Jaya Sharma might be subjected to cross-examination on her behalf and she might be allowed to cross-examine the statement of Smt. Jaya Sharma, but AO even did not refer to such requests made by assessee in the assessment order. It was, therefore, clearly established that AO had not supplied any adverse material to assessee which was collected at the back of assessee. It was well settled Law that any material collected at the back of assessee or any statement recorded at the back of assessee could not be read in evidence against assessee, unless same was confronted to assessee and that assessee should be allowed to cross-examine to such statements. In this case, the AO had failed to produce Smt. Jaya Sharma before assessee for cross-examination on behalf of assessee particularly when Smt. Jaya Sharma had retracted from her statement. Therefore, such statement and material collected at the back of assessee, could not be read in evidence against assessee. AO also referred to statement of husband of  assessee recorded during the course of survey in which he had admitted to have sold the property and received the cash amount. The present case was with respect to purchase of property of Dera Mandi from the Seller-Smt. Jaya Sharma. Therefore, the statement of husband of assessee was not relevant to the matter in issue.  Therefore, the statement of husband of assessee was not relevant to the matter in issue and as such they could not be the basis for making any addition against assessee in assessment year under appeal. There was no basis for AO to make any addition against assessee of Rs.1.05 crores.

FULL TEXT OF THE ORDER OF ITAT DELHI

PER BHAVNESH SAINI, J.M.

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