Assessee has right to get complete statements recorded against him – High Court

Assessee has right to get complete statements recorded against him and relied upon by the Income Tax Department  during the assessment proceedings 

In a recent order, the Hon’ble High Court of Karnataka directed that complete statements recorded against assessee and relied upon by the Income Tax Department  during the assessment proceedings be made over to the assessee.

ABCAUS Case Law Citation:
ABCAUS 4165 (2024) (07) HC

In the instant case, the Petitioner assessee had challenged the assessment order passed by the Assessing Officer (AO) under Section 147 of the Income Tax Act, 1961 (the Act). The petitioner also sought for setting aside of the notice of demand, show cause notice for penalty, notice under Section 148, show cause notice under Section 148A(b) and the order passed under Section 148A(d) of the Act.

he case of the petitioner was that during the assessment proceedings, the AO had relied on certain seized material and statements of certain persons and on the basis of such seized material and statements made, the Assessing Officer had passed an order.

It was submitted that the specific request of the petitioner for furnishing the entirety of the statements made as also the seized material, had not been accepted in its entirety and only the portions of statements were made available which has prejudiced the petitioner.

It was prayed that the matter be relegated to the Assessing Officer with appropriate direction to the Assessing Officer to make available the statements which are relied upon by the department as well as to share the seized material.

The Hon’ble High Court observed that in response to the show cause notice, the assessee in his reply requested for the copy of the complete seized materials relied upon by the department. He had also sought complete statements recorded from various persons which were relied upon by the department in their show cause notice. The assessee wrote that providing bits and pieces of information will not meet the ends of justice and this was also not in accordance with law. Further, the assessee had sought for the opportunity of cross examining all the persons whose statements were relied upon by the department.

The assessee in his reply specifically stated that for want of the documents requested, he had not been able to make complete rebuttal of the entire allegations against him and raise complete and effective defenses.

The Hon’ble High Court noted that it was not in dispute that only portions of the statements were furnished to the petitioner as evident from the assessment order. The request of the assessee was specifically to provide “complete statements recorded”.

The Hon’ble High Court opined that it would be appropriate for a full opportunity to be given to the petitioner that complete statements recorded which are relied upon during the assessment proceedings being made over to the petitioner.

With respect to the seized material, the Hon’ble High Court opined that it is open for the petitioner to make a request during the assessment proceedings and the same may be considered appropriately. Keeping in mind that, if any material that is seized, is being used in the assessment proceedings against the petitioner, same is to be shared with the petitioner.

Accordingly, the Hon’ble High Court seta side the order passed u/s 147 of the Act and the matter was relegated back to the Assessing Officer to reconsider the matter after providing an opportunity and making available the statements of such persons which are sought to be relied upon and would constitute an adverse statements as regards the petitioner. It was also directed that the petitioner was entitled for cross examination of the persons whose statements were relied upon and made use of by the revenue in the assessment proceedings. 

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