Kundal Raghubir Bhandari Vs ITO (ITAT Mumbai)
In this case, the Income Tax Appellate Tribunal (ITAT) Mumbai reviewed an appeal filed by the assessee against an order by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The dispute arose from the addition of ₹11,33,000/- as undisclosed income by the Assessing Officer.
The Assessing Officer initiated proceedings under section 148 of the Income Tax Act based on information received from the Directorate of Income Tax, Central Circle-1(3), Mumbai. The information suggested that the assessee had made a cash payment of ₹11,33,000/- to M/s. Bhagwati Developers for the purchase of a flat, which was not disclosed in the return of income.
During the assessment proceedings, the assessee denied making any cash payment to the builder and requested an opportunity for cross-examination of witnesses and access to contrary evidence used against him. However, the Assessing Officer relied solely on the statement of Shri Kulin Shantilal Vora, a key person of M/s. Bhagwati Developers, who allegedly confirmed the cash payment by the assessee.
The ITAT observed that no opportunity for cross-examination was provided to the assessee, and the assessment was solely based on the unverified statement of a third party. The tribunal emphasized that principles of natural justice require an opportunity for cross-examination when relying on a witness’s testimony. Since the assessee was not given this opportunity and no other corroborative evidence was presented, the ITAT deemed the assessment order as “bad in law” and allowed the appeal partly.
