2023 (12) TMI 222 - HC - Income Tax

Bogus LTCG - Penny stock transaction - proceedings initiated against the petitioner only based on the statement of one Naresh Jain - As argued respondent had not provided any opportunity to the petitioner to cross-examine the said Naresh Jain - as contented the oral statement of Naresh Jain was not relied upon by the respondent, however, only the documents, which were obtained based on the statement of Naresh Jain was relied upon - HELD THAT - As the respondent had only relied upon the documents, which were obtained based on the statement of Naresh Jain. Hence, this Court is of the view that the petitioner is entitled to get a copy of those documents, which were obtained from various sources based on the statement of Naresh Jain, since furnishing the said documents will enable the petitioner to file her detailed reply. In the present case, the learned Senior Standing counsel for the respondent had fairly submitted that though the respondent had relied upon very many documents to substantiate the case against the petitioner, some of the documents were not provided to the petitioner and the same will be provided at the earliest. Hence, after receipt of the said documents, the petitioner shall file her detailed reply. If no reply is filed, there is no doubt that it will go against the petitioner.

Summary

Issues Involved:
The issues involved in this case pertain to challenging a Notice dated 16.03.2022 and subsequent orders dated 31.03.2022 and 28.03.2023 issued by the respondents. The main contentions revolve around the petitioner's request for the statement and documents relied upon by the respondents, as well as the opportunity to cross-examine a key individual, Naresh Jain.

Request for Statement and Documents:
The petitioner's counsel argued that the proceedings against the petitioner were solely based on the statement of Naresh Jain, yet the relevant documents were not provided to the petitioner. The petitioner sought a direction from the Court to compel the respondents to furnish the said statement and documents for review.

Opportunity for Cross-Examination:
Furthermore, the petitioner requested an opportunity to cross-examine Naresh Jain, emphasizing that the proceedings were initiated based on his statement. The petitioner contended that without such an opportunity, the fairness of the proceedings would be compromised.

Legal Considerations and Response:
The Senior Standing Counsel for the respondent argued that the reliance on documents obtained from various sources based on Naresh Jain's statement rendered cross-examination unnecessary, citing legal precedent from Telestar Travel Pvt Ltd vs. Special Director of Enforcement (2013) 9 SCC 549. The respondent assured that the relevant documents would be provided to the petitioner.

Court's Analysis and Decision:
After considering the submissions from both parties and examining the materials on record, the Court noted that the respondent primarily relied on documents sourced from Naresh Jain's statement. The Court concluded that the petitioner was entitled to receive copies of these documents to prepare a detailed reply.

Final Order:
The Court set aside the impugned order dated 28.03.2023 and remitted the matter back to the respondent for re-consideration. The respondent was directed to provide the relied-upon documents to the petitioner within 30 days, after which the petitioner was instructed to file a reply. Subsequently, the respondent was to pass an appropriate order after a personal hearing for the petitioner. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed accordingly.