PANKAJ SHARMA,DEHRADUN vs. COMMISSIONER OF INCOME TAX (APPEALS)-3 NOIDA, NOIDA

Brief facts of the case are that, a search operation conducted u/s 132 of the Income Tax Act, 1961 was carried out in the case of one, Shri Krishna Sharma & Smt. Sheetal Sharma on 02.02.2022. As per AO, during the search, several incrimination documents, loose sheets, digital devices were found and seized at residential and

Aggrieved by the assessment order, the assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 28.11.2025, dismissed the Appeal of the Assessee.

As against the order of the Ld. CIT(A), the Assessee preferred the present appeal before the Tribunal.

The Ld. Counsel for the Assessee addressing to all the Grounds of appeal submitted that the authorities below committed error in making/sustaining the addition amounting to Rs. 5,00,000/- u/s 69B of the Act r.w.s. 115BBE of the Act relying on the loose sheet of paper which is nothing but ‘dumb document’. Further submitted that there is no mentioning of ‘cash’ payment and the alleged incriminating material being a ‘dumb document’ which was not corroborated with any of the statement or evidence. Further submitted that though the loose paper was not found from the possession of the Assessee, the Revenue has not provided opportunity for cross-examination. Therefore, submitted that the addition made by the A.O. which has been upheld by the Ld. CIT(A) is liable to be deleted.

Per contra, the Ld. Department's Representative submitted that the Assessee admitted the fact of purchase of property and conveniently denied the ‘cash payment’ for purchase of the said property. Even in the seized document, it is clearly mentioned regarding payment of Rs. 5.00 lakhs apart from payment made through banking channel of Rs. 15.00 lakhs. Further submitted that the seized document clearly establishes the fact of payment of Rs. 5,00,000/- over and above the amount of sale consideration mentioned in the sale deed. The Ld. Departmental Representative relying on the orders of the Lower Authorities, sought for dismissal of the Appeal.

We have heard both the parties and perused the material available on record. The sole basis for making addition was the Page | 3

From the plain reading of the above seized document, it was found that there is no mentioning of the word ‘cash’. Admittedly the documents, have been seized from the third party, however, the Assessee has not been provided with opportunity of cross examination. The Assessee has specifically raised a Ground before the Ld. CIT(A) regarding violation of principals of natural justice on the ground that the Assessee has not been given opportunity of cross examination of the said Krishna Sharma. However, the Ld. CIT(A) held that the opportunity of cross examination is not a compulsory requirement before deciding the matter. The Coordinate Bench of the Tribunal in the case of Shri Gaurav Gupta in ITA No.31/DDN/2025 has deleted the addition by making following observations:-

It is further observed that addition on identical facts on the basis of entry in the same document was also made in the case of Bhagwani Devi vs DCIT where the Co-ordinate Bench of Dehradun Tribunal in ITA No.31/DDN/2025 vide order dated 22.08.2025 has deleted the addition by making following observations in para 8 to 10 of the order: 8. “From the plain reading of the above seized document it was found that there is no mentioning of the word ‘cash’. Admittedly the documents, have been seized from the third party, however, the Assessee has not been provided with opportunity of cross examination. The Assessee has specifically raised a Ground before the Ld. CIT(A) regarding violation of principals of natural justice on the ground that the Assessee has not been given opportunity of cross examination of the said Krishna Sharma. However, the Ld. CIT(A) held that the opportunity of cross examination is not a compulsory requirement before deciding the matter. 9. The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise(2015) 62 Taxmann.com (S.C) held as under:- “not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two Page | 5

In the result, Appeal of the Assessee is allowed.