Law: Income Tax Act, 1922

Section: 23

Indian Income Tax Act, 1922 (XI of 1922)-Section 23---Assessment-Principles of natural justice-Assessment proceedings whether judicial proceedings--Held yes-Principles of natural justice whether applicable to such proceedings-Held yes-Assessment made on basis of statements of two witnesses-Assessee allowed to cross examine the witnesses but their names and identities not disclosed-Copies of statements made by witnesses or substance thereof not supplied to assessee-Inspection of records not permitted-;Whether assessment vitiated by violation of the principles of natural justice-Held yes. Assessment proceedings before Income Tax Officers are judicial proceedings and the principles of natural justice are applicable to such proceedings. The elementary principle of natural justice is that the assessees should have, knowledge of the material that is going to be used against him so that he may be able to meet it. The assessee has a right to inspect the records and all relevant documents before he is called-upon to lead, evidence in rebuttal. Where an addition of Rs. 82,937, as income from undisclosed, sources was made in the assessment of the assessee on the basis of statements made by two witnesses but permission to cross-examine, the witnesses was given to the assessee without furnishing copies of the statements made by the witnesses or conveying the substance of their statements or even giving the names of the witnesses and the assessee was-not permitted to inspect the record: Held that the assessment was vitiated by violation of the principles of natural justice as the permission given for- cross examination of witnesses was illusory. Cases referred to; Suraj Mall Mohts & Co, v. A. V. Visvanatha Sastri [1954].26 L.T.R. 1; [1955] l.S C.R. 448 (S.C.) and Dhakeshwari Cotton Mills. V. Commissioner of Income tax [1954] 26 I.T.R. 775 ; [1955] I.S.C.R, 941 (S.C.). JUDGMENT [The Judgment of, the Court was delivered by SATISH CHANDRA J]-The income tax Appellate Tribunal has submitted thefollowing questions of law for the opinion of this court: (1) Whether the assessee get reasonable opportunity to meet the case that -the-department had set up against it? (2) Whether…

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