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2020 (4) TMI 787 - AT - Income TaxEstimation of income - Rejection of books of accounts - Bogus purchases - not allowing the assessee to cross examine the witnesses - AO made the addition of 25% of these alleged bogus purchases - CIT (A) while sustaining the addition has applied 18% as Net Profit on such purchases - HELD THAT:- Disallowance made by the AO based on the 3rd party information gathered by the Investigation Wing of the Department which was not subjected to independent verification by the AO was deleted by the ld. CIT (A), confirmed by the Tribunal as well as by the Hon’ble High Court which was further upheld by the Hon’ble Supreme Court while dismissing the appeals filed by the revenue. Even otherwise, the assessment order solely based on the statements of the 3rd party is not sustainable in law when the opportunity of cross examination was not given to the assessee. As decided in M/S ANDAMAN TIMBER INDUSTRIES LTD. [2005 (3) TMI 763 - SC ORDER] not allowing the assessee to cross examine the witnesses by the adjudicating authority with the statements of those witnesses were made the basis of impugned order is a serious flaw which makes the order nullity as well as it amounts to violation of principles of natural justice. In the case in hand, when the assessee has demanded the cross examination, the AO instead of giving the opportunity to the assessee to cross examine the witnesses has rather asked the assessee to produce those witnesses. Purchases made by the assessee in the said case from M/s. Avi Exports were treated by the AO as bogus, however, the Tribunal after considering the voluminous documents filed by the assessee before the lower authorities has set aside the orders of the lower authorities and deleted the addition made on account of alleged bogus purchases. It is pertinent to note that the addition made by the AO in the said case of M/s. Haryana Jewellers Pvt. Ltd. vs. ITO (supra) was also on the basis of statement of Shri Rajendra Jain. Where the assessee has produced all the relevant documentary evidences which prove the genuineness of the purchases as well as following the decisions as relied upon by the assessee, we delete the addition sustained by the ld. CIT (A) on account of bogus purchases. - Appeal of the assessee is allowed
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