The ITAT Raipur in Jeewan Kukreja v. DCIT held that an assessment cannot survive where additions are made solely on the basis of third-party search material and investigation reports that were never supplied to the assessee. The case involved an addition of ₹89,97,950 treated as unexplained income allegedly linked to accommodation entries identified through the “JSK Server” discovered during a search in the J.M. Jain Group. The Assessing Officer relied on server extracts, seized documents, employee statements, emails, bank analysis, and investigation screenshots to identify the assessee under the alias “ROSHAN,” but none of these materials were furnished to the assessee during assessment proceedings. While the CIT(A) deleted the addition relating to alleged undisclosed sales, it sustained the addition of ₹89,97,950. The Tribunal found that the Revenue failed to establish that the relied-upon material had been supplied for rebuttal. Holding that this violated the principles of natural justice and the doctrine of audi alteram partem, the ITAT ruled that the defect went to the root of the assessment, rendering it arbitrary and legally unsustainable. The assessment for AY 2022-23 was quashed and the assessee’s appeal was allowed.
Core Issue: The Tribunal considered whether an addition of ₹89,97,950 alleged as unaccounted income from accommodation entries through the J.M. Jain Group could survive when the material relied upon by the AO—namely JSK Server data, corroborative search documents, and screenshots received from the Investigation Wing—was not furnished to the assessee.
Facts: A search in the J.M. Jain Group revealed a parallel accounting system known as the “JSK Server,” allegedly recording cheque and cash components of transactions. The assessee, engaged in the garment business through M/s Utkal Mens Zone, was identified in the server under the alias “ROSHAN.” Based on this information, the AO treated ₹89,97,950 as unexplained unaccounted income. Though the assessment order referred to server data, employee statements, seized documents, emails, bank analysis and investigation screenshots, none of these materials were provided to the assessee during assessment proceedings.
Findings of AO and CIT(A): The AO made additions of ₹89,97,950 as unaccounted income and ₹69,01,788 as alleged undisclosed sales. The CIT(A) deleted the addition relating to sales discrepancy but sustained the addition of ₹89,97,950.
ITAT Findings: The Tribunal noted that the Revenue was unable to show that the JSK Server extracts, supporting search material, or investigation screenshots had ever been supplied to the assessee. Since the addition was founded entirely on material used behind the assessee’s back, without affording any opportunity to explain or rebut it, there was a clear violation of the principles of natural justice and the doctrine of audi alteram partem. The Tribunal held that such a defect went to the root of the assessment and rendered the order arbitrary, bad in law and legally unsustainable.
Held: Any assessment based on documents, statements, or investigation material not supplied to the assessee is vitiated for breach of natural justice, irrespective of the merits of the underlying addition.
Final Conclusion: The ITAT quashed the assessment for AY 2022-23 and allowed the assessee’s appeal. Since the assessment itself was annulled, all issues on the merits of the additions were treated as academic.
Judicial Support: The Tribunal relied on decisions including Commissioner of Income Tax v. Amitabh Bachchan, Micro Marbles Pvt. Ltd. v. ITO (Rajasthan High Court), and ACIT v. Sun and Sun Inframetric Pvt. Ltd. (Chhattisgarh High Court), reiterating that any material relied upon against an assessee must be supplied before an adverse view is taken.
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