Cross-examination in reassessment matters is essential before relying on investigation statements against the assessee.

Reassessment based on statements and material gathered during investigation cannot be sustained where the assessee is denied effective cross-examination of the witnesses relied upon. Mere issuance or service of summons does not cure the defect if the witnesses do not appear, and their non-appearance cannot be used against the assessee. Reliance on such disputed material without cross-examination offends fair play and the principles of natural justice. Reassessment may still proceed on other legally sufficient material, but the revisional order could not stand to the extent it affirmed the reassessment on the impugned statements, and the matter was remanded for fresh decision in accordance with law.

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Issues: Whether the reassessment order could stand when statements and material collected during investigation were used against the assessee without effective opportunity of cross-examination, and whether the revisional order affirming the reassessment was sustainable.

Analysis: The reassessment proceedings were founded upon statements recorded during investigation behind the back of the assessee. The assessee was entitled to cross-examine the witnesses whose statements were relied upon, and the mere issuance and service of summons did not cure the defect when the witnesses did not appear. In such a situation, the non-appearance of the witnesses could not be used against the assessee, and the statements as well as the material collected from those witnesses could not be relied upon in the absence of cross-examination. The Court held that this omission violated the basic requirements of fair play and the principles of natural justice. While reassessment could still proceed on any other legally sufficient material, the impugned orders could not rest on the disputed statements and material.

Conclusion: The revisional order was unsustainable to the extent it affirmed the reassessment based on material used without effective cross-examination. The matter was remanded to the revisional authority for fresh decision in accordance with law.

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