Cross-examination rights: not available at the Section 148A preliminary stage; entitlement arises at reassessment under Section 147.

At the preliminary enquiry under Section 148A the assessor may consider statements recorded under search provisions as part of the material to form prima facie satisfaction, but a conclusive finding on escapement of income is not required; accordingly the assessee is not entitled to cross-examine the person whose Section 132(4) statement is relied upon at the 148A stage. The entitlement to cross-examination arises only at the reassessment stage when a final reassessment under Section 147 is proposed based on that statement.

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Issues: Whether, at the stage of passing an order under Section 148A of the Income-tax Act, 1961, the assessee is entitled to cross-examine a person whose statement under Section 132(4) is relied upon by the Assessing Officer.

Analysis: Section 148A requires the Assessing Officer to conduct any necessary enquiry, issue a show-cause notice, consider the assessee's reply and decide, on available material, whether to issue a notice under Section 148. The proceeding under Section 148A is aimed at forming a prima facie satisfaction to initiate reassessment under Section 147 and is distinct from the final determination under Section 147. The statement recorded under Section 132(4) may form part of the material considered at the 148A stage, but a final conclusion on escapement of income is not required at that stage. The requirement of cross-examination of a person whose statement is relied upon becomes relevant when the Assessing Officer proposes to pass a reassessment order under Section 147 and relies on that statement for a conclusive finding.

Conclusion: Held that cross-examination of a person whose statement under Section 132(4) is relied upon is not required at the stage of passing an order under Section 148A of the Income-tax Act, 1961; entitlement to cross-examination arises at the reassessment (Section 147) stage. This conclusion is against the assessee and in favour of the revenue.

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