2025 (5) TMI 1341 - SC - Income Tax

Denial of cross-examination process of witness - Importance of cross examination of the witnesses whose statements have been utilized by the Assessing Officer in the assessment order - ACIT restricted cross examination process by denying the questions asked by the Petitioner during cross examination - As decided by HC 2023 (6) TMI 94 - JHARKHAND HIGH COURT as gone through the directions in the remand order wherein he has allowed the appellant cross examination of the witnesses whose statements have been utilized by the AO in the assessment order. There is no ambiguity in the said directions. We hereby direct the petitioner to file petition for recall of the witnesses who have been cross-examined and discharged to put them the question which have been initially discarded by the AO. HELD THAT - We are clearly of the opinion that the impugned judgment/order of HC is unsustainable and should not have been passed. The High Court ought not to have interjected and interfered in the manner in which the statements of witnesses were being recorded by the Assessing Officer to submit a remand report. It is the discretion of the appellate authority that is CIT (A) before whom the appellate proceedings or the assessing officer before whom the remand proceedings are pending to decide the questions to be put the witnesses. Of-course the assessee is entitled to put cross questions on the statement made and other relevant aspects. We are informed and it is recorded in the order 2024 (7) TMI 1637 - SC ORDER that the cross-examination of witnesses on behalf of the respondent was completed and the remand report has been submitted by the Assessing Officer to the appellate authority. It is stated that the objections filed by the respondent Madhu Korah are pending before the appellate authority. The objections filed by the respondent Madhu Korah will be dealt with by the CIT(A). We hereby record that the appellate authority that is the CIT(A) will be at liberty to proceed in accordance with law without being influenced by any observations and directions in the impugned judgment/order of HC.

Summary

The Supreme Court, through Chief Justice Sanjiv Khanna and Justice Sanjay Kumar, allowed the appeal and set aside the impugned judgment/order dated 03.05.2023 as "unsustainable." The Court held that the High Court erred in interfering with the manner in which the Assessing Officer recorded witness statements for a remand report. It emphasized that the discretion to decide the questions to be put to witnesses lies with the appellate authority, i.e., the Commissioner of Income Tax (Appeals) [CIT(A)], or the Assessing Officer during remand proceedings. The assessee retains the right to cross-examine witnesses. The Court noted that cross-examination by the respondent was completed and the remand report submitted. Objections filed by the respondent, Madhu Korah, remain pending before the CIT(A), who "will be at liberty to proceed in accordance with law without being influenced by any observations and directions in the impugned judgment/order dated 03.05.2023." The appeal was allowed and disposed of accordingly.