I believe yes it is very possible. Muscle burns fat, so if you put on muscle the fat burning is also increased.
Now, it really depends how much muscle you're looking to add and what your starting point is. If you're average height and let's say 140lbs, you could probably put on 10-15lbs and drop bodyfat. However, if you're already jacked (say 220lbs) and looking to put on a good amount of muscle, I would say no.
Basically, if you've already pushed your body to the upper limits then putting on more muscle without adding fat is difficult. However, if you're a newb then you can definitely put on muscle while losing bodyfat if your diet is in check. Just don't be unrealistic and expect to add 30lbs muscle while dropping 10% bodyfat. I think adding ~10lbs lean muscle while dropping 2-3% bodyfat is achieveable for a newbie.