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2016 (11) TMI 444 - AT - Income TaxAddition of all sundry creditors - denial of natural justice - AO issued a show cause to assessee on the basis of statements of two creditors and added all the sundry creditors to the income of assessee without allowing any opportunity to assessee to cross examine the creditors - Held that:- According to settled legal proposition in case Revenue collected material behind the back of the assessee and used the same against him and no opportunity was given to him to cross the person whose statement has been used against the assessee for making the addition. Then it is clear violation of principles of natural justice justifying deletion of addition. In view of above, CIT(A) rightly observed that Assessing Officer was not justified in making the addition of entire sundry creditors to the income of assessee on the basis of inquires conducted from only two creditors. The purchase and sales reflected in the audited books of accounts have been examined and accepted. There is no adverse inference in respect of any entry relating to sale, purchase or payments made to creditors. Assessee filed confirmatory letters of balances of all creditors, who have been paid off in subsequent years. The confirmatory letters filed by assessee include the confirmatory letters of the two creditors whose statements have been recorded by Assessing Officer. The two creditors, whose statements were recorded, were not allowed to be cross-examined by assessee. - Decided in favour of assessee
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