Cross-examination denial in reassessment proceedings vitiated reopening based on untested informer statements and slips.

Reassessment based on an informer's statement and alleged slips was held unsustainable where the assessee was denied a real opportunity to cross-examine the witness whose material formed the foundation of reopening. The court noted that the earlier hearing did not amount to effective cross-examination, and the later inability to produce the witness did not cure the defect. Proceeding on untested material violated fair play and left the basis of the reassessment unverified. The orders were therefore quashed, with the apparent error on the face of the record also accepted.

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Issues: Whether the reassessment orders were liable to be quashed for denial of a real opportunity to cross-examine the informer whose statement and slips formed the basis of reopening, and for error apparent on the face of the record.

Analysis: The reopening and reassessment rested substantially on the statement of a dismissed employee and on slips allegedly produced by him. The petitioner persistently sought an effective opportunity to cross-examine that witness so as to challenge both the relevance of the slips and the truth of the statement relied on by the taxing authority. The opportunity earlier fixed did not result in any effective cross-examination, and the later inability to produce the witness did not cure the defect. The authority proceeded to make the reassessment on untested material without satisfying the requirement of fair play. Since the very foundation of the order remained untested in the manner known to law, the order also suffered from an apparent error.

Conclusion: The reassessment orders were unsustainable and were quashed in favour of the assessee.

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