1987 (8) TMI 426 - HC - VAT and Sales Tax

Summary

Issues:
1. Opportunity for cross-examination of third party in reassessment proceedings.

The judgment deals with a revision filed by the assessee against the Tribunal's order for the assessment year 1981-82. The assessee had requested the assessing officer to summon M/s. Mool Chand Multan Singh, a commission agent, to explain discrepancies noticed in their books of account. However, the assessing officer did not summon the third party for cross-examination. The Tribunal observed that the assessee had not raised the issue of cross-examination in earlier stages of appeal and denied the transactions without sufficient evidence. The assessee challenged this observation, arguing that they had indeed requested the assessing officer to summon M/s. Mool Chand Multan Singh for examination. The High Court agreed with the assessee, setting aside the reassessment order and directing the assessing officer to summon the third party for cross-examination to enable the assessee to examine them and decide the case afresh.

The key contention in this judgment revolves around the assessee's right to cross-examine a third party whose books of account were relied upon in reassessment proceedings. The High Court emphasized that when entries from a third party's books are used for reassessment, the assessing officer must provide the assessee with an opportunity to examine and cross-examine that party. The failure to allow such cross-examination can vitiate the reassessment process. The Court found that the assessee had indeed requested the assessing officer to summon the third party for examination, contrary to the Tribunal's observation. As a result, the reassessment order was set aside, and the case was remanded to the assessing officer with directions to summon M/s. Mool Chand Multan Singh for the assessee's examination.

Overall, the judgment underscores the importance of procedural fairness in reassessment proceedings, particularly regarding the right to cross-examine third parties whose records are used in the assessment process. It highlights that the assessing officer must afford the assessee a meaningful opportunity to examine and challenge the evidence relied upon, including through cross-examination. Failure to provide such an opportunity can render the reassessment invalid, necessitating a fresh assessment with proper procedural safeguards.