Assessment based on Third-Party Evidence cannot be Confirmed If Evidence not Provided to Searched Person: ITAT

The Income Tax Appellate Tribunal (ITAT) has ruled that assessments based on third-party evidence cannot be upheld if the evidence is not provided to the assessed individual for rebuttal. In a recent case, the assessing officer relied on information from a third party to make additions to the taxpayer's income without furnishing the evidence to the taxpayer. The ITAT emphasized that such actions violate the principles of natural justice, as the taxpayer must be given an opportunity to examine and contest the evidence used against them. The tribunal set aside the assessment order and remanded the matter for fresh adjudication, directing the assessing officer to provide the relevant evidence to the taxpayer and allow for a proper defense. This ruling reinforces the necessity for transparency and fairness in tax assessments, ensuring that taxpayers' rights are protected during the assessment process.​