Denial of Cross-Examination Request in Income Tax Act Proceedings: Kerala HC Rejects Writ Petition as Premature [Read Order]

In a recent case related to denial of cross examination request in Income tax act proceedings, the Kerala High Court rejected the writ petition which was too premature a stage for considering its request.

Ekk Infrastructure Limited, the Petitioner, is a company registered under the Indian Companies Act, 2013 and engaged in contract works. On 12.01.2018, the petitioner was converted into a Public Limited Company.  Under a search under Section 132 of the Income Tax Act, 1961 (‘the Act’) conducted by the Income Tax Department on 16.11.2023, proceedings have been initiated by the respondents, and notices were issued under Section 142(1) of the Act for the assessment years 2017-18 and 2023-24. 

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In the meantime, petitioner filed an application  requesting to cross-examine four persons mentioned therein. However, by the order, the said request was declined, pointing out that the persons sought to be cross-examined are the Directors and employees of the petitioner itself and not a third party warranting cross-examination.  

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The notices have been issued under Section 142(1) of the Act in respect of two assessment years for which the proceedings have been initiated. Petitioner could not point out any specific reason warranting an interference by this Court under Article 226 of the Constitution of India at this stage with the said notices.  Those are statutory notices initiating proceedings, and hence interference is warranted in this writ petition. 

As far as the request of cross-examination is concerned,the counsel relied upon the decision inI.C.D.S Limited vs. Commissioner of Income Tax and Another (2021). However, no proposition has been laid down in the said decision that in all instances, opportunity to cross-examine must be granted.

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One of the persons who is requested to be cross-examined has, according to the petitioner, retracted his statement, and therefore, cross-examination is essential. On a consideration of the circumstances, it is noticed that the request for cross-examination has been rejected, pointing out that two of the persons mentioned are Directors themselves and the remaining two persons are employees.  

Since in the decision in M.K. Thomas vs. State of Kerala, Supreme Court has observed that the statement of the Directors or employees of company need not be subjected to crossexamination, the court viewed that the impugned order does not warrant any interference at the stage. The decision relied upon by the petitioner in I.C.D.S. Limited’s case stands on a different footing. Further, it is too premature to conclude that the denial of request for cross-examination should warrant any interference with the order  proposed to be passed. 

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Since the view that there is no merit in this writ petition and it is dismissed. A single bench of Justice Bechu Kurian Thomas observed that it is too premature a stage for considering its request, petitioner’s liberty to raise these contentions subsequently, in case any adverse orders are issued against him, shall not stand foreclosed. 

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EKK INFRASTRUCTURE LIMITED vs THE ASSISTANT COMMISSIONER OF INCOME TAX , 2025 TAXSCAN (HC) 275 , WP(C) NO. 6122 OF 2025 , 20 February 2025 , MARTHANDA VARMA PANDALAI.K , JOSE JOSEPH