S.10(22): Exemptincome-Educational institution-Denial of exemption-Right of cross examination-Department
disputing genuineness of transaction-Contributor to assessee denying transaction-Opportunity should be
given to assessee to cross-examine disputant-Matter setaside. (S.68, 148)
For the assessment year 1998-99, the Assessing Officer made additions denying the exemption under section 10(22). For the assessment year 2000-01, an addition was made in respect of the loan. The Commissioner (Appeals) upheld the additions. The Tribunal held that the assessee did not have the right to cross-examine the witness who made the adverse report, especially when the records did not indicate that the assessee had made any attempt to produce witnesses. On appeals by the assessee the Court held that, when the authorities entertained a doubt about the genuineness of the transaction, the Tribunal ought to have afforded the assessee an opportunity to cross-examine the disputant. The Revenue had not accepted the explanation given by the assessee. The assessee would not have expected one of the contributors to have denied the factum of contribution. This view was inevitable because but for this the assessee would not have opted to cross-examine the contributor. Therefore, when there was unexpected change of facts, the party should not be deprived of the opportunity to cross-examine the witness branded as the assessee's witness. The EvidenceAct also permits a party to cross-examine his own witness under stated circumstances. Unless it is proved that the income derived was covered under section 10(22) it could not be decided whether the addition under section 68 was possible or not. Therefore, the matter was remitted to the Assessing Officer for further consideration in the light of the legal position. (A.Ys. 1998-1999, 2000-2001)
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