Gyan Enterprises Private Limited Vs ACIT (ITAT Delhi)
‘On-Money’ Jewellery Purchase Addition Set Aside for Denial of Cross-Examination – ITAT Delhi Remands Case
The Delhi Bench of the ITAT set aside the reassessment order and remanded the matter to the Assessing Officer in a case involving alleged cash (“on-money”) payment of ₹70 lakh for purchase of diamond jewellery from the Nirav Modi/Firestar Group for AY 2012-13. The AO had made an addition under section 69B based solely on statements of third parties and electronic data seized from the Nirav Modi Group, alleging that the assessee paid part consideration in cash over and above cheque payment.
The Tribunal held that no direct incriminating material or admission was found with the assessee itself, and the entire addition was founded on statements and records of third parties. In such circumstances, the right of cross-examination becomes crucial, particularly when electronic evidence and alleged admissions of others are relied upon. The ITAT found fault with the CIT(A)’s view that denial of cross-examination caused no prejudice to the assessee.
The Bench also observed that the AO failed to obtain any independent valuation of the jewellery to establish that the cheque payment was below market value, which could have corroborated the allegation of cash payment. Holding that principles of natural justice were violated, the ITAT restored the matter to the AO with directions to allow cross-examination of witnesses and permit the assessee to rebut the allegation, including by establishing the valuation of the jewellery. The appeal was allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT DELHI
