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2010 (3) TMI 879 - ITAT HYDERABADComputation of income - unaccounted investment - survey u/s 133A - HELD THAT:- In the present case, though assessee has stated that he has incurred expenditure to earn that income, the AO has over looked this fact. In view of this, we are of the opinion that the net income generated out of commission to be taxed in the AY 2007-08 and 2008-09 and balance receipt of Rs. 1.5 crores is being capital receipt cannot be brought to tax in these assessment years. further we are of the opinion that statement recorded u/s 131 consequent to the survey action cannot be sole basis for addition unless there is a material to support the departmental case. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purposes. The CBDT instruction is binding on the department. In our opinion, addition on the basis of admission during the survey without any supportive material cannot be sustainable. In view of the judgments in the case of S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT], Paul Mathews & Sons [2003 (2) TMI 25 - KERALA HIGH COURT] and in view of the CBDT instructions, section 133A does not empower any authority to examine any person on oath, any such statement has no evidentiary value and any admission made during such statement, cannot, by itself, be made the basis for addition unless the AO have corroborative material in hand to make such additions. If there is any unaccounted investment, the same should have been brought to tax as undisclosed income and not on the basis of MoU or on the basis of unsubstantiated statements recorded either from the assessee or from the third parties. Gross violation of principles of natural justice - opportunity of cross-examining - HELD THAT:- In our opinion, the authorities concerned required to give an opportunity of cross-examining the parties concerned and also comments on the statements and books of account to be relied upon by the revenue authorities. This will enable assessee to prove the incorrectness or incompleteness of those books of account. The opportunity would therefore necessarily carrying with it right to examine witness and that would include the right to cross-examine the witness examined by the revenue authorities. The revenue authorities relied on the books of account of the M/s. Bharathi Estates and their statements and came to the conclusion that the assessee received Rs. 2.8 crores middle men commission. Placed in these circumstances, the assessee could prove the incorrectness or incompleteness of these evidences, only after cross examining them. The cross-examination of witness is one of the most efficacies method of establishing to and exposing falsehood. Though there is a record in the form of raising this ground before the CIT(A), the CIT(A) held that reasonable opportunity of being heard has been given to the assessee but the order is silent about giving the opportunity of cross-examining the witness. The normal principle is that ordinary cross-examination has to be granted when asked for. If the department to rely on any exceptions, the burden is on the department to establish the existence of any exceptions. The non-providing of cross-examination of witness clearly constitutes infraction of the right conferred on the assessee and that vitiated the order of the assessment made against the assessee. In the result, the appeals of the assessee in ITA Nos. 1152 and 1153/Hyd./2009 are allowed.
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