New Delhi, Aug. 20 -- The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a Rs.25 lakh addition made to a taxpayer's income over an alleged cash payment for a flat, holding that the Income Tax Department cannot rely on statements of third parties without giving the taxpayer access to those statements and an opportunity to cross-examine the persons concerned. The ruling was delivered in the case of Shivaji Tukaram Pawale vs Income Tax Officer, Ward 3(1), Kalyan, for assessment year 2017-18.

The dispute arose after the tax department relied on information gathered during a survey of partners of M/s Lakshmi Builders and Developers. A statement recorded under Section 131 of the Income Tax Act indicated that the builder h...