The Tribunal held that AO made additions without providing copies of statement recorded from said person and also did not provide opportunity of cross examination, even though the Assessee has specifically requested for the same. It was further observed that denial of the same is a serious flaw which renders the order a nullity in as much as it amounted to violation of the principles of natural justice. Similar view had been upheld by Hon’ble Supreme Court in the case of Kishinchand Chellaran v. CIT [1980] 125 ITR 713 (SC).

Further, on merits, the Tribunal relied on the decision of Hon’ble Supreme Court in the case of CIT v Lovely Exports (P) Ltd [2008] 216 CTR 195 (SC)  and held that the Assessee had discharged its burden cast upon it by Section 68. Once, the Assessee has discharged its initial burden then the burden shifts to the AO to prove otherwise that said sums recorded as unsecured loans in the books of accounts of the Assessee is unexplained credit which represents undisclosed income of the Assessee. Hence, the Tribunal deleted the addition made by the AO and upheld the action of the CIT(A). (AY. 2011-12)