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Issues:
1. Addition of Rs. 77 lakhs by the Assessing Officer. 2. Allegation of non-compliance with the principle of natural justice by not granting an opportunity for cross-examination before relying on statements. Analysis: 1. The judgment pertains to an appeal against an assessment order under sections 158BD and 143(3) of the IT Act, 1961, where the Assessing Officer added Rs. 77 lakhs to the assessee's income based on incriminating material found during a search operation. The material included an entry indicating the payment to the assessee by a third party. The assessee contested the addition, claiming no transaction with the parties mentioned. The Assessing Officer, however, relied on statements and documents without allowing cross-examination, leading to the disputed addition. 2. The second ground of appeal raised the issue of the Assessing Officer's failure to follow the principle of natural justice by not granting an opportunity for cross-examination. The assessee argued that without the chance to cross-examine the individuals whose statements were used against them, the evidence could not be validly considered. The Tribunal agreed with the assessee, emphasizing the importance of providing a fair hearing and the right to challenge evidence. Citing legal provisions and precedents, the Tribunal held that statements and entries from third parties must be subject to rebuttal through cross-examination to be admissible against the assessee. 3. The Tribunal concluded that the Assessing Officer's order was flawed due to the absence of an opportunity for cross-examination, violating the principle of natural justice. As a remedy, the Tribunal set aside the order and directed a fresh adjudication. The Assessing Officer was instructed to allow cross-examination of the relevant individuals, provide necessary documents to the assessee, and consider their explanations. The Tribunal clarified that setting aside the order on procedural grounds would not prejudice either party's case on merit. Consequently, the appeal was allowed on procedural grounds, ensuring fairness in the assessment process.
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