NIRANJAN D. AGARWAL,AHMEDABAD vs. THE DCIT, CIRCLE-6(1),, AHMEDABAD

The grounds of appeal raised by the Assessee read as under:- 1. Ld. CIT(A) erred in law as well as on fact in confirming addition of Rs.2,79,46,000 being made by ld. Assessing Officer on account of unexplained investment based on entries mentioned in loose papers seized/found in search action u/s.132 on M/s.Devdeep Malls & Developers Pvt.Ltd. without providing copies of alleged loose papers, copy of statement of Shri Bhupendra D. Thakkar alleging receipt of cash from appellant and opportunity of cross examination.

When the matter was called for hearing, the Ld.AR for the assessee, at the outset, submitted that the addition towards unexplained investment for booking of shops hinges on the alleged statement of the builder/recipient (Dev Group). It was submitted that from the perusal of the orders of the lower authorities, it would appear that the Developer and Builder M/s.Dev Group have made some confession before the Settlement Commission that they have inter alia received the aforesaid amount in cash from assessee for investment in shops which was not reflected in the books of accounts of the assessee. The Ld.AR took an oral plea and submitted that the copy of statement of Shri Bhupendra D.Thakkar, Director of Dev Procon Ltd. was not provided to the assessee despite specific requests. The particular of cross-examination of the witness of the department was also not provided while charging the assessee with expropriatory transactions.

The Ld.AR relied the decision of Hon’ble Supreme Court in the case of Andaman Timber Industries vs. CIT (2015) 62 taxmann.com 3 (SC) to support its contention. The Ld.AR for the assessee accordingly submitted that the orders of the lower authorities suffers from serious

The Ld.DR for the revenue relied upon the orders of the lower authorities.

We have carefully considered the rival submission. It is contended on behalf of the assessee that the additions made towards unexplained investment have been made primarily on the basis of oral evidence of the third party; namely Dev Developers. The assessee denies to have made any payment in cash to Dev Developers and therefore considered it necessary to cross-examine the witness who deposed before the Income Tax Authorities to the prejudice of the assessee. Needless to say, the statement of the third party which is made the basis for addition is required to be provided to the assessee to enable him to appreciate the contents thereof and qualifies its position. The Hon’ble Supreme Court in the case of Andaman Timber Industries (supra) has assailed the action of the Revenue and observed that not allowing the assessee to cross- examine witness is serious flaw which makes order nullity as it amounts to violation of principles of natural justice. It is the contention of the assessee that such opportunity to cross-examine the witness is a must to enable it to discredit the testimony of the witness. The breach of