ITO Vs Pramod Roshanlal Agarwal (ITAT Pune)
No cross-examination, no corroborative evidence: ITAT Pune upholds deletion of ₹1.14 crore addition under Section 69C
Case Summary:
The case arose from an assessment framed for AY 2022-23, wherein the Assessing Officer made an addition of Rs. 1,14,39,908 under Section 69C of the Income Tax Act, 1961, alleging that the assessee had paid cash to obtain accommodation entries for import transactions through a hawala network. The addition was primarily based on statements recorded during a search conducted in the case of two other individuals, who allegedly admitted to operating a syndicate facilitating foreign remittances through bogus entities. The Revenue also relied upon certain WhatsApp chats to contend that the assessee had availed accommodation entries in lieu of cash payments.
During the assessment proceedings, the assessee denied the allegations and submitted comprehensive documentary evidence, including import invoices, letters of credit, bills of entry, customs clearance documents, transportation receipts, warehouse and insurance invoices, bank statements evidencing payments through banking channels, and sales records of the imported goods. The assessee also requested an opportunity to cross-examine whose statement formed the sole basis of the addition. However, no effective cross-examination was provided.
The Commissioner of Income Tax (Appeals), after examining the documentary evidence, deleted the addition holding that the Assessing Officer had failed to produce any corroborative material establishing that the assessee had made cash payments or received accommodation entries. The CIT(A) further held that denial of cross-examination violated the principles of natural justice.
