Baleshwar Sharma v. Deputy Commissioner of Income Tax

What happened

The petitioner challenged an assessment order of 22 September 2026 under section 143(3) of the Income Tax Act, 1961. In an earlier petition, W.P.(C) 5921/2026, the High Court had set aside an assessment order of 31 March 2026 that added ₹1,00,00,000, based on a slip recovered from Pradeep Kumar Sehgal on which ₹10,000 was written, and on his statement that three zeros were left out. On 30 April 2026 the Court directed the Assessing Officer to fix a date between 18 and 20 May 2026 with seven days' notice and allow cross-examination. The Assessing Officer fixed 19 May 2026 at 11:30 a.m.; the petitioner, who had a matter in the High Court, arrived at 12:20 p.m. after the witness left at 12:10 p.m. At the petitioner's request, a further date of 26 May 2026 was fixed, on which the petitioner and his counsel attended but the witnesses did not. A new officer who then took charge passed an assessment order on the same lines and raised the same demand.

Questions before the court

• Did the Assessing Officer comply with the High Court's direction on cross-examination, or should the new assessment order be set aside for denying that opportunity?

Why the court ruled this way

The petitioner argued that he missed the witness by ten minutes, that the officer could have called the witness back, and that the whole addition rested on a slip with a wrongly recorded name (paragraphs 8 and 9). The department said it gave ten days' notice, the witness waited from 11:30 to 12:10, nobody informed the officer of the delay, and a second witness, Yogesh Jain, was also called (paragraphs 10 to 12). The Bench found the petitioner indolent and negligent, and called his plea of a High Court hearing a lame excuse, since an assessee has to prioritise his cases (paragraph 15). It nevertheless intervened because the Assessing Officer himself issued a fresh notice for 26 May 2026 at the petitioner's request, on which date the witnesses failed to appear, so he had condoned the earlier lapse and could not say the opportunity was not availed (paragraph 16). Witnesses cannot be called again and again, so costs were imposed (paragraph 17).

Controlling point

The petitioner was careless, but the assessment order must be set aside because the Assessing Officer had condoned the lapse and then did not produce the witnesses on the next date.

Order and next steps

The petition was allowed and the assessment order of 22 September 2026 set aside. The petitioner must pay ₹25,000 to each witness (Pradeep Kumar Sehgal and Yogesh Jain) when they appear for cross-examination, keeping pay orders or bankers' cheques ready, and cross-examination is allowed only on payment. The Assessing Officer is to fix a date preferably between 16 and 30 November 2026 on at least seven days' notice and must ensure the witnesses are available; if they fail to appear on three occasions, the officer is to pass an order in accordance with law. After cross-examination he is to pass a fresh assessment order, having due regard to it.

Practical implications

An assessee given a court-ordered chance to cross-examine should treat the fixed date as non-negotiable and warn the officer promptly of any delay; if the officer later fixes a further date, the earlier lapse may be treated as condoned.

Limits of this ruling

• The Court allowed the petition on the Assessing Officer's own indulgence and charged costs for the petitioner's conduct; it did not decide the merits of the ₹1 crore addition or the evidential value of the slip.