Search assessments require disclosed seized materials, cross-examination, and Section 65B compliance before additions can stand.

Search assessments under Section 153A were found vulnerable where assessees were denied panchanamas and seized materials needed to meet the department's case. Reliance on third-party statements without allowing cross-examination was treated as a breach of natural justice. Electronic evidence such as spreadsheets, emails and WhatsApp communications could not support additions without compliance with Section 65B of the Evidence Act. In these circumstances, the alternative remedy objection did not bar writ intervention, and the assessments were set aside with remand for fresh consideration after supplying materials and following procedural safeguards.

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Issues: (i) Whether the reassessment orders under Section 153A of the Income-tax Act, 1961 were vitiated for denial of panchanamas and seizure-related materials. (ii) Whether reliance on statements recorded under Section 132(4) without affording cross-examination violated natural justice. (iii) Whether electronic records relied upon for addition were admissible without compliance with Section 65B of the Indian Evidence Act, 1872. (iv) Whether the impugned assessments could be sustained in the face of the alternative remedy objection and whether the matter required remand.

Issue (i): Whether the reassessment orders under Section 153A of the Income-tax Act, 1961 were vitiated for denial of panchanamas and seizure-related materials.

Analysis: The assessment was based on search materials, yet the assessees had sought copies of the panchanamas and seized documents to understand what materials were relied upon and from which premises they were recovered. The record showed that not all panchanamas were furnished, although the materials were used in the assessment. Denial of those documents prevented the assessees from effectively meeting the case built by the department.

Conclusion: The denial of panchanamas and seizure-related materials vitiated the assessments and was against the assessees.

Issue (ii): Whether reliance on statements recorded under Section 132(4) without affording cross-examination violated natural justice.

Analysis: Statements of third persons were relied upon for making additions, but the assessees were not given an opportunity to cross-examine the makers of those statements despite request. Where a statement is used against a person, fairness requires an opportunity to test it. The fact that the statements were of employees did not remove that requirement. The assessments also could not be sustained by relying on statements of persons belonging to another group without giving an opportunity of rebuttal.

Conclusion: Refusal of cross-examination violated natural justice and the finding is against the Revenue.

Issue (iii): Whether electronic records relied upon for addition were admissible without compliance with Section 65B of the Indian Evidence Act, 1872.

Analysis: The additions were supported by electronic records such as Excel sheets, notebooks, files, e-mails and WhatsApp communications. In the absence of the mandatory Section 65B certificate and compliance with the statutory requirements for electronic evidence, such material could not be treated as admissible proof for sustaining the assessment.

Conclusion: The electronic records were inadmissible for want of Section 65B compliance, which is in favour of the assessees.

Issue (iv): Whether the impugned assessments could be sustained in the face of the alternative remedy objection and whether the matter required remand.

Analysis: The Court found clear violations of natural justice and evidentiary requirements. In such circumstances, the existence of an alternative statutory remedy did not bar writ intervention. Since the defects went to the root of the assessments, the proper course was to set aside the orders and send the matter back for fresh consideration with directions to furnish materials, permit cross-examination, and comply with the law governing electronic evidence.

Conclusion: The alternative remedy objection was rejected and the matter was remanded for de novo assessment in favour of the assessees.

Final Conclusion: The search-related assessments could not be sustained because the assessees were denied essential search materials, cross-examination of relied-upon witnesses, and lawful proof of electronic evidence, and the matters were therefore sent back for fresh assessment with procedural safeguards.

Ratio Decidendi: Where search assessments under Section 153A rely on seized materials, third-party statements, or electronic records, the assessee must be given the relevant documents, an opportunity of cross-examination where statements are relied upon, and compliance with the statutory requirements for admissibility of electronic evidence; otherwise the assessment is liable to be set aside and remitted for fresh adjudication.

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