Horizon Buildmart Pvt. Ltd Vs ACIT (ITAT Delhi)
Reopening Sustained but ₹8.35 Cr Loan Addition Quashed: ITAT Deletes Section 68 Addition for Denial of Cross-Examination
The Delhi ITAT partly allowed the assessee’s appeal by upholding the validity of reopening under Section 147 but deleting the substantive addition of ₹8.35 crore made under Section 68 on account of alleged accommodation entry loans. The Tribunal held that although reassessment proceedings initiated on the basis of search-related information and investigation inputs were legally valid, the addition could not survive on merits since it was founded solely on third-party statements recorded behind the assessee’s back.
The assessee had furnished confirmations, ITRs, bank statements and financials of the lender to establish identity and creditworthiness, and also pointed out that the loan had been repaid through banking channels much before the search. The Tribunal noted that copies of statements relied upon were never supplied to the assessee and no opportunity of cross-examination was granted, which amounted to a serious violation of principles of natural justice. Relying on Supreme Court and High Court precedents including Andaman Timber Industries and several ITAT decisions, it was held that additions based on such untested statements are unsustainable. Accordingly, the entire addition of ₹8.35 crore was deleted, while the reopening itself was upheld, and the appeal was partly allowed
FULL TEXT OF THE ORDER OF ITAT DELHI
