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2020 (4) TMI 256 - AT - Income TaxReopening of assessment - bogus purchases - Denial of opportunity to cross examine a person whose statement is being relied upon to make the addition - HELD THAT:- It is settled position of the principles of natural justice that the assessee should not be deprived of an opportunity to cross examine a person whose statement is being relied upon to make the addition in the hands of the assessee. When the assessee has subsequently requested the AO to provide an opportunity to cross examine the person, whose statement is being relied upon, he ought to have been provided the same or at least he could have been provided with the statement of the said person to enable the assessee to rebut such statement with necessary evidence. Thus deem it fit and proper to remand the issue to the file of the AO with a direction to provide a copy of the statement (wherein the assessee’s name is mentioned as beneficiary) to the assessee and provide it with an opportunity to cross examine such person, if necessary. For the AY 2009-10, the assessee had also filed a copy of the affidavit of Mr. Rajender Jain retracting the statement made by him during the course of search. In such a situation, it is even more important that the assessee should be given an opportunity to cross examine the party particularly when he has confirmed the transaction made by the assessee. Another factor which could go in favour of the assessee is that the assessee has also shown the sale of such diamonds subsequently to one of the parties in Hyderabad who have been confirmed the transaction and the assessee has also received the consideration through banking channels. There cannot be any sale of stock if there were no purchases. Therefore, this factor also needs to be considered - assessments for both the years are set aside and are remanded to the file of the AO for reconsideration and for re-adjudication as directed above.
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