Failure to Formally Request Cross-Examination Does Not Invalidate Assessment Order: Calcutta High Court

Justice Raja Basu Chowdhury affirms the necessity of formal procedures in tax assessments, allows appeal within 15 days to address natural justice concerns.
In a significant judgment, the Calcutta High Court, presided over by Justice Raja Basu Chowdhury, dismissed a writ petition challenging an income tax assessment order and demand notice. The court emphasized the necessity for formal requests for cross-examination during assessment proceedings and provided the petitioner, Dinesh Khaitan, with an opportunity to appeal to the appellate authority, despite procedural delays.
The petitioner, Dinesh Khaitan, challenged the assessment order dated March 7, 2024, and the subsequent demand notice issued under the Income Tax Act, 1961. The core contention was the reliance on third-party evidence, specifically statements from Amit Kumar Agarwal of the Amit Agarwal Group, without affording Khaitan the opportunity to cross-examine. Khaitan argued that this omission constituted a violation of the principles of natural justice.
The court highlighted the procedural aspects involved in the case. Justice Chowdhury observed that the petitioner had indeed responded to the notices and participated in the proceedings but failed to make a specific request for summoning Amit Kumar Agarwal for cross-examination. The court noted, “It does not appear that the petitioner had made any specific request before the assessing officer, inter alia, praying for issuance of summons on Amit Kumar Agarwal for him to be produced for the purpose of cross-examining him.”
Addressing the petitioner’s argument about the denial of natural justice, the court stated, “The mere making of a statement in the response that the order under Section 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 Amit Kumar Agarwal cannot vitiate the entire assessment order.”
The judgment extensively discussed the procedural requirements for ensuring fair assessment proceedings. The court referenced the Supreme Court’s precedent in ITO v. M. Pirai Choodi (2010) 15 SCC 283, emphasizing the need for a formal application for cross-examination to preserve the right of natural justice. Justice Chowdhury remarked, “Given the nature of enquiry, the mere making of a statement in the response without a formal application for issuance of summons for cross-examination cannot invalidate the assessment order.”
Justice Chowdhury underscored the procedural lapse on the petitioner’s part: “Although the petitioner participated in the proceedings, the absence of a specific request for cross-examination cannot be overlooked.” He further noted, “Failure to specifically request cross-examination cannot invalidate the assessment order, but the appellate authority should consider such a request in light of Supreme Court guidelines.”
The Calcutta High Court’s judgment reinforces the procedural rigor required in tax assessment proceedings. By dismissing the writ petition, the court highlighted the importance of formal procedural requests for cross-examination to uphold principles of natural justice. The petitioner has been granted a 15-day window to appeal to the appellate authority, with directions for the authority to consider the appeal on merits and address the request for cross-examination in accordance with established legal precedents. This decision underscores the judiciary’s commitment to procedural fairness while navigating complex tax assessment disputes.
 

Date of Decision: 15 May 2024