Right to cross-examination and access to seized documents: late unspecified requests unsustainable; assessment remitted for fresh adjudication.

Assessment under Section 143(3) and penalty under Section 271AAD(1)(i) were quashed and remitted for fresh adjudication because the petitioner failed to obtain seized documents within prescribed time and sought cross-examination belatedly without identifying the persons whose statements were relied upon; the assessing standard applied was preponderance of probabilities. The petitioner is allowed an opportunity to apply for relevant documents, file a composite reply and be heard, subject to a conditional pre-deposit of 25,00,000 before de novo proceedings; non-compliance permits action under Section 144.

---

---

Issues: Whether the assessment under Section 143(3) and consequential penalty under Section 271AAD(1)(i) of the Income-tax Act, 1961 are sustainable where the petitioner sought documents and cross-examination but failed to specifically identify persons for cross-examination and did not avail earlier opportunities to copy seized materials.

Analysis: The assessment standard is based on preponderance of probabilities. The petitioner did not respond to the notices under Section 143(2) and Section 142(1) by obtaining the seized materials within the time prescribed and instead sought cross-examination without naming the persons whose statements were relied upon. The request for cross-examination at the late stage, without specifying the points or persons and without having first availed the opportunity to copy seized documents, was treated as unsustainable. In view of the substantial tax and penalty consequences, the matter was remitted for fresh consideration allowing the petitioner an opportunity to apply for relevant documents, file a composite reply to the earlier notices, and be heard; a conditional pre-deposit was directed before de novo proceedings.

Conclusion: The impugned assessment under Section 143(3) and penalty under Section 271AAD(1)(i) are quashed and the matter is remitted for fresh adjudication. Relief is granted to the petitioner in part pending compliance with directions including deposit of Rs. 25,00,000 and filing of a composite reply; if the petitioner fails to comply, the respondent may proceed under Section 144 of the Income-tax Act, 1961.

---