Back
2026 Supreme(Online)(ITAT) 5603
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Narender Kumar Choudhry, Judicial Member, Prabhash Shankar, Accountant Member
Mohan Jejumal Thadani – Appellant
Versus
Income Tax Officer– 17(2)(3) – Respondent
ITA No.3269/MUM/2025 (A.Y. 2009-10)
For the Appellants/Petitioners: Ms. Ritika Agarwal, Sufura M. Ibrahim
For the Respondents: Shri Bhagirath Ramawat
Denial of cross-examination opportunity on key witness statement violates natural justice, requiring remand.
Headnote:Under S.69, 143(3) r.w.s. 147 of the Income-tax Act, 1961, addition made on basis of third-party loose sheets seized during search u/s 132 and statement u/s 131 of director confirming cash payments. Facts: Assessee denied cash investment in shop purchase, claimed payments via bank and loans; AO attributed 45% share of alleged on-money Rs.21,44,380 as unexplained investment despite later clarification by witness that figures were projected. Court found denial of cross-examination violated natural justice.
Issues: Whether addition sustainable without corroborative evidence or cross-examination opportunity on witness statement central to addition; validity of reassessment without proper notice/approval. Ratio: Principles of natural justice mandate opportunity to cross-examine witness if statement forms sole basis of adverse finding; formal cross-examination not required but fair chance to rebut essential; remanded for compliance (para 7.1-7.5). Appeal allowed for statistical purposes; matter remanded to AO to afford cross-examination and decide afresh.
| Table of Content |
|---|
| 1. appeal challenges addition u/s 69 and reassessment validity. (Para 1 , 2 , 3) |
| 2. additional grounds admitted as legal jurisdictional issue. (Para 4) |
| 3. facts: loose sheet cash allegation denied by assessee. (Para 5) |
| 4. ar reiterates no cross-exam, violation of natural justice. (Para 6) |
| 5. cross-examination mandatory for statement-based additions. (Para 7) |
| 6. remanded for cross-exam; appeal allowed statistically. (Para 8 , 9) |
आदेश/ORDER
PER PRABHASH SHANKAR [A.M.] :-
The present appeal arising from the appellate order dated 28.03.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, ADDL/JCIT(A)-2, Siliguri [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 29.12.2016 for the Assessment Year [A.Y.] 2009-10.
2. The grounds of appeal are as under:
1. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.21,44,380/-as unexplained investment u/s 69 of the Income Tax Act, 1961.
2. The Ld. CIT(A) erred in upholding the addition despite the Appellant’s denial of any cash transaction and absence of any material or evidence belonging to the Appellant in connection with the alleged cash payment.
3. The Ld. CIT(A) failed to appreciate that the addition was made solely based on loose sheets seized from a third party (M/s Gayatri Homes) without any corroborative evidence.
4. The Ld. CIT(A) has erred in upholding the validity of the reassessment proceedings u/s 147 without proper service of notice u/s 148.
5. The Ld. CIT(A) has erred in sustaining the assessment order despite the fact that copy of approval for reopening had not been provided even after express request by the Appellant.
6. The Ld. CIT(A) has erred in upholding the addition without providing an effective opportunity for cross-examination of Shri Kantilal M. Patel, whose statement formed the basis of the addition.
7. The Ld. CIT(A) has erred in ignoring the specific statement of Shri Kantilal Patel in his letter dt.04.05.2009, that the loose sheet figures were projected and not actual in all cases.
8. The Ld. CIT(A) erred in failing to follow the binding precedents rendered in similar factual matrix, rendering his order bad in law.
3. At the outset, it may be stated here that the assessee before the Bench has filed additional grounds of appeal which read as under:
“10.1 The Ld. CIT(A) has erred in law in upholding the assessment order passed u/s 143(3) r.w.s 147 of the Act, although the said assessment order was completely void ab initio since the reasons recorded mentioned a search u/s 132 on another person, and the operation of section 147 of the Act was precluded.”
10.2 The Ld. CIT(A) has erred in law in upholding the assessment order passed u/s 143(3) r.w.s 147 of the Act, although the said reassessment proceedings were without jurisdiction, as held by hon’ble Bombay High Court in the case of Sejal Jewellary & Anr. vs. Union of India & Ors. bearing WP no. 3057 of 2019 dt. 18.02.2025.”
3.1 It is submitted that the assessee preferred appeal before ITAT wherein it has challenged the addition on account of unexplained investment u/s 69 of the Act amounting to Rs 21,44,380/-.Subsequently, it was observed that one vital ground had been inadvertently omitted from being included in the “grounds of appeal” attached with Form 36. The said ground goes to the very root of the matter and challenges the jurisdiction of the AO in initiating reassessment proceedings and passing assessment order u/s 143(3) r.w.s 147 of the Act.It is pleaded that the above ground was inadvertently omitted to be taken in the appeal memo filed before the ITAT. It is requested that the same be admitted for adjudication in the interest of natural justice. Reliance in this regard is being placed on the judgment of Mahindra and Mahindra reported in 313 ITR (SB) Mum 263 and NTPC reported in 229 ITR 383 (SC).
4. We find that the
