Jaipur ITAT deletes ₹5.20 lakh bogus purchase addition over denied cross-examination

The Jaipur bench of the Income Tax Appellate Tribunal deleted a disputed bogus purchase addition amounting to ₹5.20 lakh. The tribunal based its decision on the violation of natural justice, noting that an adverse third-party statement was deployed against the assessee without granting an effective opportunity for cross-examination.

Denying a taxpayer the chance to cross-examine a witness whose statement forms the basis of an income addition invalidates the evidentiary value of that statement under settled legal principles. Assessing officers cannot sustain additions for accommodation entries or unverified purchases solely on borrowed satisfaction without allowing the assessee to test the veracity of the third party.

The revenue's addition of ₹5.20 lakh stands deleted, relieving the taxpayer from the disputed tax liability associated with those specific purchases.