2024 (5) TMI 912 - HC - Income Tax

Reassessment order under Section 147 upheld as petitioner failed to request cross-examination summons during proceedings

Dinesh Khaitan Versus Union of India & Ors.

The HC dismissed a writ petition challenging a reassessment order under Section 147 on grounds of denial of cross-examination opportunity. The petitioner ... Validity of reassessment order u/s 147 - Denial of Cross-Examination Opportunity - as argued appellant had not been granted an opportunity to cross-examine person whose statement addition was made - violation of principles of natural justice - HELD THAT:- From the aforesaid order or from the documents relied on by the petitioner, it does not appear that the petitioner had made any specific request before the assessing officer, inter alia, praying for issuance of summons on third party [Amit Kumar Agarwal] for him to be produced for the purpose of cross examining him. Although, Petitioner has strenuously argued that failure on the part of the authorities to afford opportunity to the petitioner to cross examine the said Amit Kumar Agarwal has the effect of vitiating the order passed u/s 148A (d) of the said Act as also the entire assessment proceeding, petitioner having not approached this Court earlier and having not made any specific prayer for cross examining the said Amit Kumar Agarwal before the assessing officer at the stage of the proceeding under Section 147 of the said Act, the present writ petition cannot be entertained on such ground. Given the nature of enquiry, mere making of a statement in the response that the order u/s 148A (d) of the said Act was decided without affording the petitioner the right to cross-examine, without applying for issuance of summons for production of third party [Amit Kumar Agarwal] cannot vitiate the entire assessment order on such ground. Admittedly, there is an alternative remedy in the form of appeal, though the petitioner submits that the time to prefer an appeal by reasons of pendency of the writ petition has expired. Taking note of the fact that the writ petition was filed on 1st April 2024, the petitioner should be permitted to approach the appellate authority under the said Act. If the petitioner approaches the appellate authority within a period of 15 days from date and files appeal along with the server copy of this order with an application under Section 5 of the Limitation Act, 1963 explaining the delay, the appellate authority shall consider the same. Issues involved: Challenge to assessment order u/s 147 read with 144B of Income Tax Act 1961 and demand notice u/s 156 of the Act, denial of opportunity to cross-examine third party, appealability of order, violation of principles of natural justice.Assessment Order Challenge:The petitioner challenged the assessment order dated 7th March 2024 passed u/s 147 read with 144B of the Income Tax Act 1961, citing denial of opportunity to cross-examine Amit Kumar Agarwal from Amit Agarwal Group, whose evidence was crucial in the assessment. The petitioner contended that failure to provide the opportunity to cross-examine vitiated the order and the entire proceeding lacked principles of natural justice.Denial of Cross-Examination Opportunity:The petitioner had responded to show cause notices and emphasized the need to cross-examine third parties providing evidence. Despite the petitioner's requests, the assessing officer did not grant the opportunity to cross-examine Amit Kumar Agarwal, leading to a challenge on the grounds of violation of natural justice principles.Appealability of Order:The respondent argued that the order u/s 147 of the Act is appealable, suggesting that the petitioner should pursue the appeal process for redressal. Citing a Supreme Court judgment, the respondent contended that the entire grievance could be appropriately addressed through the appeal mechanism.Court's Decision:The Court noted that the petitioner did not specifically request summons for cross-examination during the assessment proceedings. While acknowledging the importance of natural justice, the Court held that the petitioner's failure to make a specific prayer for cross-examination before the assessing officer precluded the writ petition's consideration on those grounds. The Court highlighted the alternative remedy of appeal and directed the petitioner to approach the appellate authority within 15 days, with the option to request cross-examination of Amit Kumar Agarwal.Judicial Precedent Consideration:The Court referred to a Division Bench judgment where failure to provide an opportunity for cross-examination led to setting aside the assessment order. However, in the present case, as the petitioner did not request summons for cross-examination during the assessment, the Court directed the petitioner to pursue the appeal route within the specified timeline.Conclusion:The writ petition was disposed of without costs, with directions for the petitioner to approach the appellate authority within 15 days. The petitioner was granted the opportunity to request cross-examination of Amit Kumar Agarwal before the appellate authority, in line with the observations made by the Supreme Court in a relevant case.Judge's Decision:The Hon'ble Judge disposed of the writ petition, emphasizing the importance of following due process and utilizing the available appellate remedy for redressal, while providing specific directions for the petitioner to pursue the appeal process effectively.