VINEET SUDHAKARRAO,BANGALORE, KARNATAKA vs. ITO, WARD 4(1)(3), BANGALORE, KARNATAKA

PER WASEEM AHMED, ACCOUNTANT MEMBER:

Page 2 of 6 (Secular), a registered but unrecognized political party. The AO found, based on search proceedings at the premises of the said party, that it was engaged in issuing bogus donation receipts in lieu of commission, with the balance amount returned to donors. On this basis, the AO disallowed the donation and added it back to the assessee’s total income.

Page 3 of 6 suffers from gross violation of natural justice and NFAC’s Standard Operating Procedures (SOPs). It was pointed out that para 4.4 of the assessment order and the show cause notice (SCN) dated 10.02.2024 clearly reveal that evidences relied upon by the AO were never confronted to the assessee. This, it was submitted, is contrary to the SOP dated 03.08.2022 issued by NFAC under section 144B, which mandates that: • Para N.4.3: “To meet the requirements of principle of natural justice, additional SCN/questionnaire must be issued where any modification prejudicial to the assessee, other than those shared in the SCN, is found prima facie acceptable.”

• Para N.5.1.2: “Inquiries conducted and response of the assessee, if additional SCN/questionnaire is issued, must be duly recorded.”

• AU-7 Format: Requires that the AO mandatorily provide a summary of information/evidences collected, along with attachments, which are proposed to be used against the assessee.

5.1 The AR submitted that none of these mandatory requirements were complied with. The assessee was not even confronted with the alleged evidences, much less given opportunity to cross-examine the persons whose statements were relied upon. It was further submitted that even those statements did not specifically name the assessee. Hence, the entire assessment rests on assumptions and presumptions. The AR further contended that several binding case laws on natural justice were cited before the ld. CIT(A), but were not considered. It was .

Page 4 of 6 thus pleaded that the addition of ₹50,00,000/- is unsustainable both in law and on facts and deserves to be deleted.

7.1 In the present case, para 4.4 of the assessment order itself acknowledges that the evidences relied upon were not confronted to the assessee. The SCN dated 10.02.2024 also reveals the same. This is a direct violation of the SOP provisions as well as principles of natural justice. The assessee was neither provided with the materials relied upon nor given opportunity to cross-examine the persons whose statements were used. In fact, as pointed out by the ld. AR, even those statements did not specifically implicate the assessee.

Page 5 of 6 7.2 While it is true that cross-examination is not an invariable attribute in every case (Krishna Chand Chela Ram v. CIT), the present case stands on a different footing. Here, the entire addition of ₹50,00,000/- rests upon third-party material collected in search, without confrontation. Such denial goes to the root of procedural fairness. The AO’s failure to follow NFAC SOPs compounds the violation.

7.3 The CIT(A) sustained the addition primarily on the ground that the political party was found to be engaged in bogus donations. However, the assessee’s fundamental grievance is that material was not confronted remains unaddressed. The binding SOP requirements and natural justice principles cannot be bypassed.

7.4 Accordingly, in our considered view, the addition of ₹50,00,000/- made by the AO and confirmed by the ld. CIT(A) is not sustainable in law. The same is directed to be deleted. Hence, the ground of appeal of the assessee is allowed.

Order pronounced in court on 29th day of September, 2025