INCOME TAX ACT, 1961

Section 143

Assessment - Cross examination - Confirmation of demand without cross-examination of person who provided evidence against assessee -

The appellate tribunal remanded the matter to the assessing authority after finding that the bank accounts of one M ought to have been verified and, further, that the petitioner was entitled to cross examine the said M. In the consequent order that was passed pursuant to the remand from the tribunal, the assessing authority found that the cross examination of M could not be permitted because of the non-availability of M for cross examination, despite summons issued to him. The assessing authority, however, proceeded to rely on the evidence tendered by M without testing the said evidence through cross examination at the instance of the petitioner. Held: If the evidence relied upon by the revenue for confirming a demand against the assessee is not tested, through permitting a cross examination by the assessee, then the untested evidence cannot be relied upon against the assessee while confirming a demand against him. Inasmuch as the impugned orders of the assessing authority rely on material that was not tested, assessment order is quashed and AO was directed to pass fresh orders in lieu thereof, after taking note of the observations in this judgment.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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