Shri Parvesh Gupta vs Income Tax Officer

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), NFAC, Delhi (hereinafter referred to as 'the CIT(A)') dated 10th March, 2026, for assessment year 2021-22.

Shri Navneet Singal appearing on behalf of the assessee submits that the assessee is a Chartered Accountant by profession. The assessment for assessment year 2021-22 in case of the assessee was reopened consequent to search action under Section 132 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') in the case of Pavel Garg and Family on 29th June, 2022. During post-search investigations, it was found that M/s Combitic Global Caplet Private Limited made huge transactions with various parties. It is alleged that the assessee is one of the beneficiaries. Hence, notice under Section 148 was issued to the assessee. The learned AR contended that the assessee has no connection with Pavel Garg or M/s Combitic Global Caplet Private Limited. The assessee, in response to the notice under Section 142(1) and during assessment, asked for the statements and evidences used against him, but the documents on which Assessing Officer placed reliance to make addition were never provided to the assessee. The Assessing Officer, in paragraph 6 of the assessment order, records that the assessee had requested for copy of the documents on which reliance is placed for initiating reassessment proceedings but, the same were not provided. Rather, the Assessing Officer commented that right of cross-examination is not an absolute right. Finally, the Assessing Officer made addition of ₹6,59,025/- under Section 69A of the Act as unexplained cash payment received from M/s Combitic Global Caplet Private Limited. Aggrieved by the assessment order dated 29th March, 2025, the assessee filed appeal before the CIT(A). The CIT(A), vide impugned order, confirmed the addition and dismissed appeal of the assessee.

The learned Counsel submits that the addition is liable to be quashed as there is no reference to any seized document for making the addition. The assessment is also liable to be quashed for violation of principles of natural justice as the documents which were used by the Assessing Officer for making addition were never confronted to the assessee. The learned Counsel further pointed that, before the CIT(A) the assessee had informed that the statement of Shri Rakesh Prasad of M/s Combitic Global Caplet Private Limited recorded during the course of investigation was retracted. The CIT(A) brushed aside the argument of the assessee holding that retraction of statement does not automatically invalidate the information gathered during the course of investigation.

Per contra, Shri Manoj Kumar representing the Department, vehemently defending the impugned order and prayed for upholding the addition. The learned DR reiterated findings of the Assessing Officer and the CIT(A) and urged for dismissing appeal of the assessee.

Both sides heard, orders of the lower authorities examined. The limited issue for consideration in the present appeal is the addition of ₹6,59,025/- made by the Assessing Officer under Section 69A of the Act. A perusal of the assessment order reveals that the addition was made in the hands of the assessee consequent to some incriminating material found during the course of search in the case of Pavel Garg and family, followed by further investigation, wherein it was found that M/s Combitic Global Caplet Private Limited had made huge transactions in cash with various parties. The statement of one Shri Rakesh Prasad of M/s Combitic Global Caplet Private Limited was also purportedly recorded. However, in the entire assessment order, there no reference to the specific incriminating material or the relevant extract of the statement of Shri Rakesh Prasad wherein the name of the assessee is mentioned. It is further observed that the addition has been made in violation of principles of natural justice as the alleged incriminating material and the statement which is used against the assessee were never provided to the assessee despite specific request. The Hon'ble Supreme Court of India in the case of Andaman Timber Industries Vs. CCE reported as (2016) 15 SCC 785 has held that failure to give right to cross-examine the witnesses whose statements are relied upon results in breach of principles of natural justice. It is a serious flaw which renders the order a nullity.

Thus, in light of findings given above, the addition of ₹6,59,025/- is directed to be deleted. The impugned order is set aside and appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed.