August 2016
Cash credit- Section 68 of I. T. Act, 1961- A. Y. 1983-84- The assessee is bound to be provided with the material used against him apart from being permitted to cross examine the deponents- The denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment order and renders it vulnerable-
By K. B. Bhujle Advocate
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H. R. Mehta vs. ACIT(Bom); ITA No. 58 of 2001 dated 30/06/2016 (www.itatonline.org)
In the A. Y. 1983-84, the assessee had taken loan of Rs. 1,45,000/- which the Assessing Officer treated as non genuine and made addition of the amount as unexplained cash credit u/s. 68 of the Income-tax Act, 1961. The Tribunal upheld the addition.
On appeal by the assessee, the Bombay High Court held as under:
“i) On a very fundamental aspect, the revenue was not justified in making addition at the time of reassessment without having first given the assessee an opportunity to cross examine the deponent on the statements relied upon by the ACIT. Quite apart from denial of an opportunity of cross examination, the revenue did not even provide the material on the basis of which the department sought to conclude that the loan was a bogus transaction.
ii) In the light of the fact that the monies were advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the revenue should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable.
iii) In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal.”
