“reliance on third party statement”
The decision most relied on for reliance on third party statement is CIT v. SMC Share Brokers Ltd. (288 ITR 345), cited in 181 judgments on BharatTax.
Leading authorities on reliance on third party statement
An Assessing Officer cannot make an adverse assessment based solely on the statement of a third party if that party refuses to be cross-examined by the assessee and no other corroborating material exists.
An assessment order is invalid if it relies on statements of third-party witnesses without granting the assessee the opportunity to cross-examine them, as this constitutes a fundamental breach of natural justice. No addition can be sustained if based solely on un-cross-examined statements.
Third-party statements cannot be used against an assessee without providing an opportunity for cross-examination. This ensures adherence to principles of natural justice.
A statement from a third party cannot be relied upon in assessment proceedings without corroborative evidence. Adverse inferences cannot be drawn against the assessee from the statements of third parties without such corroboration.
