New Track Exim Private Limited Vs ITO (ITAT Delhi)
Delhi ITAT Deletes ₹90.50 Lakh u/s 68: Reopening Upheld but Addition Fails for Denial of Cross-Examination
Reopening Survives, Addition Doesn’t: No Cross-Examination, No Section 68- Faceless Suspicion vs. Fair Play: ITAT Strikes Down ₹90.50 Lakh Addition- Entry Operator Statement Without Cross-Examination Is No Evidence- Natural Justice Trumps Investigation Report in Section 68 Case
Delhi ITAT ‘E’ Bench in New Track Exim Pvt. Ltd. Vs. ITO [ITA No. 2765/Del/2024, AY 2012-13, order dated 31.12.2025] partly allowed Assessee’s appeal by deleting addition of ₹90,50,000 made u/s 68, while upholding validity of reassessment u/s 147. Tribunal held that reopening based on information from Investigation Wing alleging accommodation entries was valid and approval u/s 151 was not mechanical. However, on merits, Tribunal found that AO made addition solely on alleged statement of entry operator Shri Subhash Chandra Bhartia without furnishing copy of statement or granting opportunity of cross-examination despite repeated requests. Assessee had filed complete documentary evidence establishing identity, creditworthiness & genuineness of loan from M/s Oven Commercial Pvt. Ltd., and loan was repaid with interest after TDS much prior to reopening and even before search on alleged entry operator. Tribunal held that reliance on third-party statements recorded behind Assessee’s back, without cross-examination, is gross violation of principles of natural justice, following Andaman Timber Industries (SC) and several Delhi ITAT precedents. Tribunal further noted that amendment to s.68 requiring “source of source” applies only from AY 2023-24 and was not applicable to AY 2012-13. Accordingly, entire addition u/s 68 was deleted and appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
