K.A.RAUF vs. THE ASST. COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court held that if evidence relied upon by the revenue for confirming a tax demand against an assessee is not tested through cross-examination permitted to the assessee, then such untested evidence cannot be relied upon. The Court found that the impugned assessment order relied on material that was not tested. Consequently, the Court quashed Ext.P4 assessment order and directed the 2nd respondent to pass fresh orders. The fresh orders are to be passed after hearing the petitioner and taking note of the observations in the judgment, within three months from the date of receipt of a copy of the judgment. The issue of Mohan Raj's evidence and the right to cross-examine him was central to the decision.
What were the facts?
The petitioner, K.A. Rauf, is challenging an order (Ext.P4) passed by the 2nd respondent, the Assistant Commissioner of Income Tax, Circle 1(1), Kozhikode, which confirmed a tax demand. The assessment year in question is 2008-2009. The initial assessment was based on alleged lending activities. The petitioner's first appeal was decided in his favour. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which remanded the matter to the assessing authority. The ITAT directed verification of Mohan Raj's bank accounts and permitted the petitioner to cross-examine Mohan Raj. In the subsequent assessment order, the assessing authority noted that cross-examination of Mohan Raj was not possible due to his non-availability, yet proceeded to rely on Mohan Raj's evidence without allowing cross-examination by the petitioner.
What were the issues?
1. Whether the assessing authority could rely on untested evidence of Mohan Raj against the assessee when cross-examination was not permitted, despite the ITAT's direction to allow it? (Question of law and fact, concerning principles of natural justice and evidence). Assessee's Contention: The petitioner argued that the assessment order relied on evidence that was not tested through cross-examination, violating principles of natural justice. The ITAT had specifically directed that the petitioner be allowed to cross-examine Mohan Raj, which was not facilitated. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the fact that the revenue pursued the matter to the ITAT and the subsequent assessment order was passed indicates their stance was to uphold the tax demand.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT The petitioner has approached this Court aggrieved by Ext.P4 order passed by the 2nd respondent confirming a demand of tax under the Income Tax Act. In the writ petition, it is the case of the petitioner that the assessment was initially done for the assessment year 2008-2009 by making reference to certain alleged lending activities of the petitioner. In an appeal that was carried by the petitioner, the first appellate authority decided the issue in favour of the petitioner. It is stated that the revenue, however, carried the matter in further appeal before the appellate tribunal and the appellate tribunal remanded the matter to the assessing authority after finding that the bank accounts of one Mohan Raj ought to have been verified and, further, that the petitioner was entitled to cross examine the said Mohan Raj. In the consequent order that was passed pursuant to the remand from the tribunal, the assessing authority found that the cross examination of Mohan Raj could not be permitted because of the non-availability of Mohan Raj for cross examination, despite summons issued to him. The assessing authority, however, proceeded to rely on the evidence tendered by Mohan Raj without testing the said evidence through cross examination at the instance of the petitioner. In my view, if the evidence relied upon by the revenue for confirming a demand against the assessee is not tested, through permitting a cross examination by the assessee, then the untested evidence cannot be relied upon against the assessee while confirming a demand against him. Inasmuch as the impugned orders of the assessing authority rely on material that was not tested, I quash Ext.P4 assessment order and direct the 2nd respondent to pass fresh orders in lieu thereof, after taking note of the observations in this judgment. The 2nd respondent assessing authority shall pass fresh orders as directed after hearing the petitioner,
WP(C).No.25868 OF 2020(G) 3 within a period of three months from the date of receipt of a copy of this judgment. The petitioner shall produce a copy of the writ petition together with a copy of this judgment before the 2nd respondent for further action. A.K.JAYASANKARAN NAMBIAR JUDGE SJ
WP(C).No.25868 OF 2020(G) 4
Appendix — schedule of exhibits
Recent GST High Court judgments
Search GST case law →- Mascot Constructions Co. And Another vs. The Commissioner Of Goods And Services Tax (GST) And AnotherBombay · 22 Oct 2026
- Ankil Jagdishchandra Kholwadwala vs. Union Of INDIA And AnrBombay · 22 Oct 2026
- Imtiyaz Shaikh Z Chorlekar vs. Salman ShaikhBombay · 21 Oct 2026
- Vinishma Technologies Private Limited vs. State Of KarnatakaKarnataka · 17 Oct 2026
- Vinishma Technologies Private Limited vs. State Of KarnatakaKarnataka · 17 Oct 2026
