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2019 (8) TMI 277 - AT - Income TaxAddition in respect of share capital - denial of natural justice - AO has not made any endeavour to give a copy of the statements purportedly recorded during search u/s. 132(4) or recorded u/s 131 which the AO claims to contain adverse statements against the assessee - HELD THAT:- Though the AO is at liberty to make private enquiries against the assessee, however the material, he collected behind the back of the assessee cannot be used against the assessee without furnishing the same to the assessee and if the material statement is adverse in nature against the assessee then an opportunity to cross-examine the maker of the document or the third person who made the statement has to be given to the assessee as held by the Hon’ble Supreme Court in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] . AO has not made any endeavour to give a copy of the statements purportedly recorded during search u/s. 132(4) of the Act or recorded u/s 131 of the Act which the AO claims to contain adverse statements against the assessee, which action is in gross violation of natural justice for the simple reason that the AO cannot use a material which is adverse against the assessee without confronting him with that to say in other words the AO cannot keep the assessee in dark and draw adverse inference without confronting the assessee with the materials/third parties statement which the AO intends to use against the assessee and an opportunity to cross-examine those third party’s must be given to the assessee without which the third partie’s statement cannot be relied upon by the AO. No proper opportunity the assessee got before the AO - we are inclined to set aside the order of the Ld. CIT(A) and remand it back to AO with a direction to frame assessment de-novo after hearing the assessee - Appeal of the assessee is allowed for statistical purpose.
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