TMI Blog2017 (11) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessment order. Not providing such opportunity amounted to violation of principle of natural justice, a serious flaw which makes the order nullity. Hon’ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] has held that not allowing Assessee to cross-examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which made impugned order nullity as it amounted to violation of principles of natural justice. Thus no merit for the addition made by AO without allowing assessee an opportunity to cross examine the person on whose statement addition was made. - Decided in favour of assessee. - ITA No.1580/Mum/2017 - - - Dated:- 15-11-2017 - SHRI R.C.SHARMA, AM For The Assessee : Shri Ashok J Patil For The Revenue : Shri Ram Tiwari ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)-3, Thane dated 09/12/2016 for A.Y.2007-08 in the matter of order passed u/s. 143(3) r.w.s. 147 of the IT Act. 2. The following grounds have been taken by the assessee:- 1. On the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing copy of ledger account, bank statement, rate of interest and proof of repayment of loan on 23.09.2009. On 20.03.2015, the proprietor of M/s. Mayank Impex attended and statement was recorded u/s 131. Mr. Sanjay K. Choudhary in his statement stated that they import diamonds on a credit upto 180 days and these diamonds are sold locally and sale proceeds are utilized for the loan advances. Further, he also stated that during survey proceedings, statement was recorded forcibly. However, no documentary evidence was submitted. However, the AO made addition of ₹ 30,00,000/- to the total income of the assessee. 4. By the impugned order, CIT(A) confirmed the action of the AO. 5. It was contended by learned AR that the assessee in the course .of their scrutiny assessment had submitted inter-alia loan confirmation of M/s Mayank Impex for loan amounting to ₹ 30,06,000/- which was purported to be bogus as per the reasons given for reopening the assessment. The said impugned loan had been taken by account payee cheques and interest-thereon had also been paid by account payee cheques and subjected to TDS. The said impugned loan had been accepted in the course of the scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess to the financial information / financial statement of various lender parties. Inspite of having taken due care and diligence to prove the identity, capacity of the lender party and genuineness of the loan transactions, it was against the principles of natural justice for the ACIT to make additions of the loan and interest amount to their total income based on mere conjectures and surmises which were derived from certain statements appearing in their confidential report which had been retracted by the lender party. The additions grossly violate principles of natural justice as the assessee was not given any opportunity to cross examine the lender party and further were not provided copy of the statements / reports relied upon by the learned ACIT. In effect the additions were based on mere conjectures and surmises based on retracted statements which had been recorded behind the backs of the assessee and further there was no conclusive proof of any parallel cash transactions or wrong doing by the assessee. 7. On the other hand, learned DR relied on the finding recorded by lower authorities with regard to the addition made u/s.68 of the IT Act. 8. I have considered rival con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, the decision of the Tribunal being based on the fact, no substantial question of law can be said to arise from the order of the Tribunal. The appeal is dismissed with no order as to costs. 10. Hon ble Supreme Court in the case of Andaman Timber Industries 281 CTR 241 has held that not allowing Assessee to cross-examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which made impugned order nullity as it amounted to violation of principles of natural justice. The precise observation of the Hon ble Supreme Court was as under:- Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-exa ..... 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