Based on unsigned, unstamped, or unregistered addition Unsustainable is Satakhat

Fact and issue of the case

Captioned both appeals filed by the assessee, pertaining to Assessment Years (AY) 2011-12 and 2012-13, are directed against the common order passed by the Learned Commissioner of Income Tax (Appeals)-4, Surat [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

Since, the issues involved in these two appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.48/SRT/2017, for assessment Year 2011-12, have been taken into consideration for deciding the above appeals en masse. 3. First, we shall take assessee’s appeal in ITA No. 48/SRT/2017 for AY.2011-12, ( lead case) wherein the grounds of appeal raised by the assessee are as follows: “1. The learned CIT(A) has erred in law and on facts in upholding the action of the ld. A.O. in making an addition of Rs. 12,50,000/- on account of alleged payments made to Chetanbhai Chanabhai & other vide Satakhat Deed dated 09-10-2010 for purchase of land at Bamroli Block No.45 as unexplained investment u/s. 69 of the Income Tax Act. 2. The learned CIT(A) has erred in law and on facts in upholding the action of the ld. A.O. in making an addition of Rs.10,00,000/- on account of alleged payments made to Lakhiben Chimanbhai & Others vide Satakhat Deed dated 09-10-2010 for purchase of land at Bamroli, Block No.45 as unexplained investment u/s. 69 of the Income Tax Act.

The learned CIT(A) has erred in law and on facts in upholding the action of the ld. A.O. in making an addition of Rs.50,00,000/- on account of alleged payments made to Maniben Balabhai & Others vide Satakhat Deed dated 16-08-2010 for purchase of land at Bamroli, Block No.45 as unexplained investment u/s. 69 of the Income Tax Act.

The learned CIT(A) has erred in law and on facts in upholding the action of the ld. A.O. in making an addition of Rs. 17,50,000/- on account of alleged payments made to Bhaniben Bhanabhai & Others vide Satakhat Deed dated 12.10.2010 for purchase of land at Bamroli, Block No.45 as unexplained investment u/s 69 of the Income Tax Act. 5. The learned CIT(A) has erred in law and on facts in upholding the action of the ld. A.O. in making an addition of Rs. 1,00,000/- on account of alleged payments made to Lilaben Dayyabhai & Others vide Satakhat Deed dated 14-03-2012 for purchase of land at Jiav, R.S.No.358/1 & 358/2, Block No.437 as unexplained investment u/s. 69 of the Income Tax Act.

Observation by the tribunal

The tribunal has heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that during the assessment stage, the assessee has demanded that opportunity of cross-examination should be given to him. The letter written by the assessee (demanding opportunity of cross-examination) during the assessment stage, to the Assessing Officer, is placed at paper book page no. 47. The Cross examination of Turmish Kania whose statement is relied upon for making addition was not given to the assessee. Therefore, we note that opportunity of cross-examination has not been given to the assessee during the assessment stage. It is settled law that any additions made in absence of providing opportunity of cross examinations of persons, whose statement has been relied upon for making the additions is in violation of natural justice, hence cannot be sustained. The Hon’ble Supreme Court of India, in the case of Krishnachand Chelaram Vs. CIT 125 ITR 713 (SC) and Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR 0241 (SC) has held that additions without providing the opportunity of cross examination is in violation of natural justice. We note that additions made in absence of providing opportunity of cross-examination of the persons, whose statement has been relied upon for making the additions is violation of principle of natural justice. We also note that not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witness were made the basis of the impugned order is a serious flaw which makes the order nullity. We note that same view was expressed by the Hon`ble Calcutta High Court in the case of Eastern Commercial Enterprises 210 ITR 103 (Cal), wherein it was held that it is a trite law that cross examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against the party unless the party is put on notice of the case made out against him.

We note that the documents, which were found in the possession of other person, does not bear the name of the assessee, that is, the name of the assessee is not mentioned in the statement of another person. No addition can be made, if documents impounded during survey are unsigned and incomplete. No addition of unaccounted investment can be sustained when Assessing Officer had not made any further investigation. No statement recorded of land owners or purchasers as mentioned in the sale deed by AO to corroborate contents of impounded Satakhat. No specific query raised in respect of impounded Satakhat or the assessee to Turmish or Meera Kama by investing wing or AO. Therefore, no addition can be made in respect of un-signed, unstamped, Satakhat, which has not been registered and is found from CD of computer of a person who is not connected with the assessee. In view of these facts and circumstances and in law, the addition so made by the AO is without any basis, without any corroborating evidences and without allowing due opportunity of cross-examination to the assessee and is therefore, unsustainable in law. Therefore, we delete these additions.

We note that facts and grounds of appeal narrated in ITA No. 48/SRT/2017 are identical and similar to those mentioned in ITA No.49/SRT/2017 for AY.2012-13, therefore are instant adjudication shall apply mutatis mutandis to assessee`s appeal in ITA No. 49/SRT/2017 for AY.2012-13.

In the result, both the appeals filed by the assessee are allowed. Registry is directed to place one copy of this order in both the appeals folder / case file(s). Order is pronounced in the open court on 19/12/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963.

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Kalpesh-Mafatlal-Patel-Vs-DCIT-ITAT-Surat