In the matter of examination of cash deposits the tribunal in [2022] 98 ITR (Trib) 499 (ITAT[Amrit] held that the assessee cannot be kept in the dark. Adverse statements or materials cannot be kept away from his eyes. If the AO intends to use it to draw adverse inference/finding, the assessee should be provided the adverse material/statements in order to rebut/ cross-examine the provider/maker of the adverse material. Failure to do so is a serious flaw which renders the assessment a nullity.
In this case there were some mismatch/technical defect between agreement amount and cash deposits in bank and also use of adverse statements of third party which are not confronted with the assessee which lead to quashing of reassessment of the agriculturist non filer assessee.
The Tribunal sets a pointer for the AO to keep the assessee informed upfront of any inquiry that he wish to initiate in his case and never do any verification etc behind his back. Even for seeking confirmations from third parties it is most important for AO to also serve a copy of notice/letter to the assessee for his knowledge and for his seeking presence during any personal examination of any third person.
The moment the AO issue a 131/133 etc to a person in connection with ongoing assessment proceedings he must intimate the assessee too in the absence thereof all such action of the AO may lead to nullify of assessment.