Navin Shamji Vira Vs DCIT (ITAT Mumbai)
No Cross-Examination + Retracted Statement = Section 69 Addition Collapses- Mumbai ITAT Deletes Alleged Cash Loan Additions -Denial of cross-examination fatally vitiates the addition.
The assessee’s assessments for AYs 2014-15 and 2017-18 were reopened based on search proceedings conducted in the case of M/s. Evergreen Enterprises and its partner Nilesh Bharani. During the search, statements were recorded from Mr. Bharani and certain employees allegedly admitting receipt of cash loans from various persons, including the assessee. Based on this material, additions of ₹55 lakh and ₹56 lakh were made u/s 69.
However, throughout the proceedings, the assessee consistently denied having advanced any cash loans and repeatedly requested complete copies of materials relied upon as well as an opportunity to cross-examine the persons whose statements were used against him.
The Tribunal noted that despite repeated requests, the AO neither furnished complete information nor granted cross-examination. More importantly, the assessee had produced an affidavit of Nilesh Bharani retracting his earlier statement and categorically stating that the alleged loan entries actually represented his own money and that figures had been exaggerated by adding extra zeros.
The ITAT observed that once the assessee denied advancing any cash loans, the burden shifted entirely to the department to prove the allegation with cogent evidence. The Bench sharply remarked that “the assessee certainly cannot be expected to prove the negative.”
The Tribunal further held that when adverse third-party material is relied upon, the Revenue is duty-bound to confront the assessee with such material and grant effective cross-examination. Failure to follow these fundamental principles of natural justice rendered the additions unsustainable.
The ITAT also noted that in the assessee’s own case for AY 2012-13, similar additions had already been deleted earlier on the same ground of denial of cross-examination. Accordingly, the additions for both AYs were deleted.
Additionally, for AY 2017-18, the Tribunal separately quashed the reassessment itself on the legal ground that notice u/s 148 was issued after three years with approval of the PCIT instead of the authority prescribed u/s 151(ii). Relying on the Bombay High Court ruling in Alag Property Construction Pvt. Ltd. and the Supreme Court judgment in Rajeev Bansal, the ITAT held that sanction by an incorrect authority vitiates jurisdiction itself.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals by the assessee arise out of two separate orders, both dated 28.10.2025 passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Years (AYs) 2014-15 and 2017-18.
