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2025 Supreme(Online)(ITAT) 6822
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
DR. BRR KUMAR, VP, SHRI SIDDHARTHA NAUTIYAL, JM
Ratnadeep Infrastructure Private Limited – Appellant
Versus
The Income Tax Officer – Respondent
ITA No.1490/Ahd/2025 | ITA No.1491/Ahd/2025
For the Appellant: Shri Chetan Agarwal, AR
For the Respondents: Shri Abhijit, Sr.DR
Additions under the Income Tax Act must be based on substantiated evidence, and reliance on untested third-party statements without cross-examination violates principles of natural justice.
Headnote:(A) Income Tax Act, 1961 - Sections 147, 69, and 250 - Reopening of assessment - Cash payments - The impugned addition of Rs. 60,00,000/- as unexplained investment was solely based on uncorroborated statements of a third party, lacking independent verification and cross-examination - The court declined to uphold the addition emphasizing principles of natural justice. (Paras 3 to 8)
(B) Legal Principles - Third-party statements - The court reiterated that additions cannot be made solely based on statements from parties not provided for cross-examination; reliance on untested evidence is legally unsustainable. (Paras 7 and 8)
(C)
Findings of Court:
The court found the addition untenable due to absence of independent corroborative evidence and specific denial of natural justice regarding cross-examination. (Paras 8 and 9)
(D)
Issues: The core issue addressed the validity of additions made under section 69 based explicitly on third-party statements without adequate cross-examination opportunities. (Para 9) (E)
Ratio Decidendi: The court ruled that reliance on inadequately vetted statements without cross-examination violates natural justice, consequently voiding the addition. (Paras 7 to 9) (F) Parties involved: The Appellant is Ratnadeep Infrastructure Pvt. Ltd. and the Respondent is The Income Tax Officer. (G)
Result: Appeals allowed.
| Table of Content |
|---|
| 1. grounds of appeal raised by the assessee. (Para 1 , 2) |
| 2. facts surrounding the income tax assessment and reopening. (Para 3) |
| 3. arguments presented by the assessee. (Para 4) |
| 4. court's observations on the validity of the additions. (Para 5 , 8) |
| 5. final verdict regarding the appeals. (Para 9 , 10 , 11 , 12) |
ORDER
PER SIDDHARTHA NAUTIYAL, JM:
The present appeals have been preferred by the Assessee against the separate orders of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] of even date 01/07/2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Years (AYs) 2011-2012 and 2012-13.
2. The assessee has raised the following grounds of appeal in ITA No.1490/Ahd/2025 for AY 2011-12:
“1. Ld. CIT(A) erred in law as well as on facts in upholding an addition of Rs. 60,00,000 made by Id.AO being alleged cash payment towards purchase of property, solely based on statement of third party without any direct, indirect, supportive or corroborative evidence and without giving opportunity of cross examination.
2. Ld. CIT(A) erred in law as well as on facts in upholding reopening of assessment u/s. 147 based on incorrect, invalid, insufficient and vague reasons recorded for reopening based on borrowed satisfaction without due application of mind.”
2.1. The assessee has raised the following grounds of appeal in ITA No.1491/Ahd/2025 for AY 2012-13:
“1. Ld. CIT(A) erred in law as well as on facts in upholding an addition of Rs. 4,48,79,556 made by Id.AO being alleged cash payment towards purchase of property, solely based on statement of third party without any direct, indirect, supportive or corroborative evidence and without giving opportunity of cross examination.
2. Ld. CIT(A) erred in law as well as on facts in upholding reopening of assessment u/s. 147 based on incorrect, Invalid, insufficient and vague reasons recorded for reopening based on borrowed satisfaction without due application of mind.”
ITA No.1490/Ahd/2025 for AY 2011-12
3. The brief facts of the case are that the assessee, M/s Ratnadeep Infrastructure Pvt. Ltd., a company engaged in the business of development and construction, filed its original return of income for the Assessment Year 2011–12 on 27.09.2011 declaring a loss of Rs. 2,12,136/-. The return was processed under section 143(1) of the Act. Later, based on information received during assessment proceedings in the case of M/s Hytaisun Magnetics Ltd. (HML), the Assessing Officer reopened the assessee’s case under section 147 of the Act, after recording reasons to believe that income chargeable to tax had escaped assessment. The basis of reopening was the sworn statement of Shri Bharat A. Patel, director of HML, recorded under section 131 of the Act on 21.01.2016, wherein he stated that HML had sold its land and factory building at Kadi to the assessee for a total consideration of Rs. 7,58,79,556/-, out of which Rs. 2,50,00,000/- was received through cheque and Rs. 5,08,79,556/- in cash. Out of this cash component, Rs. 60,00,000/- was allegedly received during financial year 2010–11, relevant to the assessment year under consideration. The sale deed (No. KAD/1382/2012) dated 16.03.2012, however, reflected only Rs. 2,50,00,000/- as consideration, whereas the stamp valuation authority had valued the same property at Rs. 7,58,79,556/-. Based on this discrepancy and the sworn statement, the Assessing Officer held that the assessee had paid Rs. 60,00,000/- in cash out of unaccounted income toward the purchase of the said property and accordingly added the same as unexplained investment under section 69 of the Act. Though the assessee requested for cross-examination of Shri Bharat Patel, the witness expressed inability to attend due to medical reasons. The Assessing Officer, observing that the statement stood unretracted and corroborated by the high stamp duty valuation and the s
