Search: Any adverse material cannot be considered against the assessee if it was not allowed to be cross-examined by assessee

Search: Any adverse material cannot be considered against the assessee if it was not allowed to be cross-examined by assessee

IN THE INCOME TAX APPELLATE TRIBUNAL

6. We have considered the rival submissions. It is a fact that the entire addition is based on the statement made by Dr. P. Mahalingam which were recorded under section 132(4) of the I.T. Act, in which, he has admitted to have received donation/capitation fees in cash which was surrendered for taxation. The assessee, however, denied to have paid any amount in cash on account of donation/ capitation fees to Dr. P. Mahalingam or the College in which his son was admitted for MBBS Course.

Since the Revenue Department alleged that assessee has paid cash of Rs.27 lakhs as donation/capitation fees, therefore, onus is upon A.O. to prove through cogent and reliable evidence that assessee has in fact paid cash by way of donation of capitation fees to the Medical College and Dr. P. Mahalingam. In the present case, the entire case is set-up on the basis of statement of Dr. P. Mahalingam recorded during the course of search under section 132(4) of the I.T. Act, 1961, in which, he has admitted to have received donation/capitation fees in cash.

However, the assessment order is silent if any right of cross-examination have been allowed on behalf of the assessee at the assessment stage. It is also a fact that the Ld. CIT(A) at the appellate stage asked the A.O. for production of Dr. P. Mahalingam and allow an opportunity to the assessee for cross-examination. The A.O. issued summons to Dr. P. Mahalingam at the appellate stage for providing an opportunity to the assessee to cross- examine his statement, but, Dr. P. Mahalingam did not appear at the appellate stage, therefore, the fact remained that assessee has been denied right to make cross- examination to the statement of Dr. P. Mahalingam.

It is well settled Law that any adverse material collected at the back of the assessee when not confronted and that if any statement is recorded by the A.O./Revenue Department at the back of the assessee and such statement is not allowed for cross-examination on behalf of the assessee, such material cannot be considered against the assessee in the Income Tax proceedings and such material/statement cannot be read in evidence against the assessee.

We rely upon Judgments of the Hon’ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 (SC) and Andaman Timber Industries 281 CTR 214 (SC). Thus, the statement of Dr. P. Mahalingam cannot be relied upon against the assessee. There is no other material available on record so as to make any addition against the assessee. Thus, onus upon the Revenue Department to prove that assessee paid cash to Dr. P. Mahalingam or the Medical College is not discharged in the present case. In view of the above discussion, we set aside the Orders of the authorities below and delete the addition. The assessee in this appeal also challenged the reopening of the assessment. However, this issue is now left with academic discussion only because we have already deleted the addition on merit.

Accordingly, appeal of the assessee is allowed.

Read Order

Tags:  Judgement, Appellant Tribunal, Income Tax

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