Use of informant statements in income-tax assessment is valid without cross-examination if fair opportunity to rebut is given.

Income-tax assessment proceedings are not governed by the strict rules of the Evidence Act, and natural justice is satisfied if the assessee is informed of adverse material and given a fair opportunity to meet it. The department may rely on an informant's statement even if the maker is not produced for cross-examination, and that omission does not by itself invalidate the material. The sufficiency and weight of such evidence are primarily matters for the assessing authority and the Tribunal, and the High Court will not reappraise that evidence merely to substitute its own view. On that basis, the addition was upheld.

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Issues: (i) Whether a statement relied upon by the income-tax authorities could be used against the assessee when the maker was not produced for cross-examination; (ii) whether, apart from that statement, there was material to support the addition of Rs. 24,000 as income of the assessee.

Issue (i): Whether a statement relied upon by the income-tax authorities could be used against the assessee when the maker was not produced for cross-examination.

Analysis: The assessment proceedings under section 23(3) of the Income-tax Act, 1922 are not governed by the strict rules of the Indian Evidence Act, and the Income-tax Officer acts as a quasi-judicial authority. Natural justice requires that the assessee be told of the material used against him and be given an opportunity to meet it, but it is not a legal requirement that every informant or witness must be produced for cross-examination. Where a witness is actually examined in the assessee's presence, cross-examination would arise, but the refusal to produce an informant does not by itself vitiate the use of the material.

Conclusion: The statement could be relied upon, and the absence of cross-examination did not invalidate its use against the assessee.

Issue (ii): Whether, apart from that statement, there was material to support the addition of Rs. 24,000 as income of the assessee.

Analysis: The reassessment under section 34 of the Income-tax Act, 1922 was founded on the statement of Solomon Nadar. The weight and sufficiency of that material were matters for the department and the Tribunal. The High Court could not reappraise the evidence or substitute its own view on the value of the material. On that basis, the statement furnished sufficient evidence for the addition.

Conclusion: There was material on record to justify the addition of Rs. 24,000.

Final Conclusion: The reassessment was upheld and the reference was answered against the assessee on both questions.

Ratio Decidendi: In income-tax assessment proceedings, the department may rely on material obtained from an informant without producing that informant for cross-examination, provided the assessee is informed of the adverse material and given a fair opportunity to meet it; the sufficiency and weight of such material are primarily for the assessing authority and the Tribunal.

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